Western District of Michigan
Press releases recorded for this federal judicial district.
Sentences Imposed in Federal Drug Trafficking and Murder CaseRead the Press Release
GRAND RAPIDS, MICHIGAN – Four Lansing men were sentenced this week in U.S. District Court, announced U.S. Attorney Patrick A. Miles, Jr. The men - Charles Kunta Lewis, age 36, Wallee Abdullazeem Al-Din, age 24, his brother, Mustafa Al-Din, age 25, and Ralphael Crenshaw, age 24 - were tried by a jury before U.S. District Judge Robert J. Jonker during August, 2013. After a two-week trial, they were convicted of conspiring to commit drug trafficking crimes and robbery, and using a firearm during and in relation to a drug trafficking crime resulting in murder. The four defendants were found guilty of abducting and murdering Lansing resident Shayla Johnson, age 19, in an effort to obtain drugs. The sentences imposed were 50 years for Mustafa Al-Din, 60 years for Wallee Al-Din, life plus a consecutive term of seven years for Lewis, and 47 ½ years for Crenshaw.
Evidence at trial established that the defendants were members and associates of a violent Lansing street gang known as the Block Burners. The prosecution’s evidence demonstrated that during one six-week span in the summer of 2010, the defendants were involved in a pattern of robbing and at times beating victims for drugs, money and other valuable items. Their violent conduct culminated in the kidnaping and first degree murder of Shayla Johnson. The defendants wrongly believed Shayla Johnson had access to a large number of marijuana plants. The defendants planned to kidnap her in order to compel her to disclose the location of the marijuana plants. Acting on their plan, the defendants entered her home, forced her from her bedroom, and brutally shoved her into the trunk of a vehicle. When Ms. Johnson resisted, she was fatally shot multiple times with an assault rifle.
In the fall of 2010, the Ingham County Prosecutor’s Office sought the assistance of the U.S. Attorney’s Office in the prosecution of the matter because of serious concerns over allegations of obstruction and intimidation by gang members. The decision was made to transfer the case to federal court for prosecution.
“These lengthy sentences highlight the acts of senseless violence committed by these individuals; their actions were particularly heinous and brutal,” said Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Steven Bogdalek. “It is my hope that these sentences will bring some measure of comfort to the family of Shayla Johnson and to the other victims. I want to commend the investigative efforts our ATF Special Agents, Lansing Police Department, Meridian Township Police Department, Ingham County Prosecutor’s Office, and the United States Attorney’s Office.”
This case was prosecuted by Assistant U.S. Attorneys Timothy P. VerHey and Brian K. Delaney and Special Assistant U.S. Attorney Catherine Emerson, on assignment from the Ingham County Prosecutor’s Office.
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Mass City Man gets over 11 Years in Federal Prison for Selling Powerful "Bath Salts"Read the Press Release
MARQUETTE, MICHIGAN – U.S. District Judge R. Allan Edgar sentenced three people for their involvement in distributing two powerful “bath salts” – alpha-pyrrolidinopentiphenone, which is commonly known as alpha-PVP, and pentylone – for human consumption in the Upper Peninsula.
Scott Bernard Will, age 56, of Mass City, Michigan, received a sentence of 137 months (11 ½ years) in federal prison. Last December, a federal jury in Marquette found Will guilty of distributing and conspiring to distribute alpha-PVP and pentylone in Baraga and Houghton Counties. In imposing the sentence, Judge Edgar commented on Will’s extensive criminal history, noting that Will was a “walking crime wave.” Also sentenced were Derrick John Guzek, age 34, also of Mass City, and Kristen Ellen Bergeron, age 31, of Pelkie, Michigan. Guzek received a sentence of 16 months in prison while Bergeron was sentenced to 18 months.
The term “bath salts” refers to a group of substances containing synthetic cathinones that all have similar chemical properties. These substances have a powerful amphetamine-like effect on the central nervous system when consumed. Synthetic cathinones are chemically similar to the natural drug cathinone, a drug that comes from khat plants in east Africa.
The evidence presented at trial showed that Will began selling bath salts in the Marquette area in 2011. He was jailed for his activities from June 2011 until November 2012. But, upon release from jail, he went back to selling the substances. Will’s sales of alpha-PVP and pentylone in Baraga and Houghton Counties in early 2013 drew the attention of the Upper Peninsula Substance Enforcement Team and the U.S. Bureau of Indian Affairs. An undercover officer made a number of purchases of these substances from Mr. Will and his co-conspirators in March and April 2013. He and his co-conspirators were arrested in April 2013. Guzek and Bergeron pled guilty and testified for the government. Will went to trial in Marquette on December 9, 2013.
As part of its case, the government presented testimony from users who said that the bath salts sold to them by Will were extremely powerful and addictive. They reported staying up for days after injecting the substances, and experiencing psychosis, paranoia and suicidal thoughts. Judge Edgar noted that the users were “physically wrecked by these drugs.”
The evidence at trial showed Will specifically targeted people with drug problems by offering the substances for free. Once the user was hooked, Will charged up to $200 per gram.
This case was investigated by the Michigan State Police as part of the Upper Peninsula Substance Enforcement Team and the Bureau of Indian Affairs. Assistant U.S. Attorneys Maarten Vermaat and Paul D. Lochner prosecuted the case.
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Grand Rapids Man Sentenced for Mortgage FraudRead the Press Release
GRAND RAPIDS, MICHIGAN – Seamus P. Dillon, 37, of Ada, was sentenced to two years in federal prison, followed by three years of supervised release and ordered to pay restitution in the amount of $755,693 after pleading guilty to conspiracy to commit mortgage fraud, U.S. Attorney Patrick Miles announced today. The conspiracy charge alleged that during 2007, Dillon and others defrauded a bank in connection with a mortgage for 2295 Indian Mill Creek Drive NW, in Grand Rapids Michigan. As a result of a series of false statements designed to defraud the lender, Dillon and his cohorts obtained approximately $850,000 which they used for their own purposes.
In delivering the 24-month sentence, Chief U.S. District Judge Paul L. Maloney emphasized that mortgage fraud is a serious crime that undermines our financial system and hurts ordinary citizens by driving down property values. The prison sentence will be followed by three years’ supervised release.
“Mortgage fraud, like many financial crimes, threatens the financial health of our communities,” said Carolyn Weber, Acting Special Agent in Charge, IRS Criminal Investigation. “IRS Criminal Investigation will work diligently with the U.S. Attorney and our law enforcement partners to ensure that those who participate in these illegal activities are investigated and brought to justice.”
The FBI and IRS investigated the case as part of the Western District of Michigan’s Mortgage Fraud Task Force. This group was created to investigate and prosecute the growing number of mortgage fraud cases that have recently come to light. Assistant U.S. Attorney Timothy P. VerHey prosecuted this case.
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California Man Pleads Guilty to Online Enticement of A West Michigan ChildRead the Press Release
GRAND RAPIDS, MICHIGAN – Joseph Arpin, 34, pled guilty yesterday in federal court to online enticement of a West Michigan child. Arpin stated at the plea hearing that he met the 12-year-old victim online, he assumed a false identity to entice her, and he moved across the country from California to Michigan to start a sexual relationship with her. Arpin faces a minimum prison term of 10 years, up to a maximum term of life. His sentencing hearing is set for September 3, 2014.
In addition to the online enticement from July to October 2013, the indictment also charged Arpin with traveling from California to Allegan County, MI, to engage in illicit sexual conduct with the child and then transporting her from Michigan to Missouri for the purpose of engaging in criminal sexual conduct. He was arrested in Missouri on October 22, 2013, and has been in custody ever since. In exchange for the plea to online enticement, the government agreed to dismiss the other two counts. Neither of the dismissed counts carried a higher possible penalty than the online enticement count to which Arpin pled guilty.
“We will make every effort to investigate, locate, and prosecute predators who use the internet to lure children into danger,” said U.S. Attorney Patrick Miles.
The charges are the result of an investigation conducted by the Federal Bureau of Investigation (FBI), the Allegan County Sheriff’s Office, the Holland Police Department, and the St. Louis County Police Department. Assistant United States Attorney Tessa K. Hessmiller is the prosecutor on the case.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. The U.S. Attorney's Office; county prosecutor's offices; the Internet Crimes Against Children task force (ICAC); and federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate communities about the dangers of online child exploitation and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement.
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Byron Center Man Guilty of $46,000,000 Investment FraudRead the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney for the Western District of Michigan Patrick Miles announced today that David W. McQueen, age 43, of Byron Center, Michigan, was convicted of six counts of mail fraud, six counts of money laundering and three tax counts stemming from a $46,000,000 Ponzi scheme that spanned three years. He was acquitted of one fraud count and two money laundering counts. The scheme affected more than 800 families, and preyed upon unsophisticated, often elderly investors. He faces up to 20 years on each fraud count, up to 20 years on some of the money laundering counts (up to 10 years on others) and one year on each tax count.
The evidence at trial showed that, as with many investment frauds, McQueen likely did not set out to create a criminal enterprise that would result in a financial tragedy for his investors. In 2006, McQueen, who made an adequate living in sales, used borrowed funds to invest in a company called Multiple Return Transactions (“MRT”). MRT was owned and operated by Jim Clements. Clements promised returns of 10% per month or higher to McQueen. After a few months of making such returns, McQueen decided to capitalize on his apparent investment success and invited others to invest through him. McQueen created a company called Accelerated Income Group (“AIG”), through which he promised returns as high as 5-6% to investors. In addition, McQueen recruited insurance agents to sell his investments to their clients. For a short time, AIG was very successful (at least on paper). McQueen used MRT’s promised returns of 10%, to make AIG’s promised returns of 5%. McQueen could meet his 5% obligations to his investors and then keep 5% for himself.
In mid-2007, MRT stopped making payments and meeting redemption requests. MRT was merely a Ponzi scheme, and their money was gone and would never be recovered. Instead of notifying AIG investors that MRT had failed, however, McQueen continued to tell investors that their money was safe and growing. Without MRT making its monthly payments, McQueen and AIG could not meet their 5% monthly obligations to investors based on investment earnings. Instead, McQueen used the only funds he had available to make promised interest payments – money from new investors.
Instead of shutting down AIG, or at least notifying his investors of MRT’s cessation of interest payments, McQueen falsely touted his investment success and raised millions of dollars of additional money. In addition to AIG, McQueen created three other funds, International Opportunity Consultants (“IOC”), Diversified Liquid Asset Holdings (“DLAH”) and Diversified Global Finance (“DGF”), that were nothing more than sham corporations designed to raise millions of dollars from investors. McQueen commingled the investor money between his various and purportedly distinct funds and used it to make bogus interest payments and redemption requests to investors, pay commissions to agents that sold the funds on McQueen’s behalf, or simply spend the money. Despite knowing that he had absolutely no revenue coming in, McQueen took $100,000 of investor money per month tax free for his own personal use and enjoyment.
Recognizing that his scheme would collapse without actual investment success, McQueen placed approximately 30% of the investor funds in a series of highly speculative investments or scams. Unsurprisingly, this effort did not generate significant returns, and many lost all of the funds invested.
To perpetuate his fraud, McQueen sent out monthly or quarterly account statements communicating to investors that their investments were safe and growing. Investors relied on those account statements and believed they accurately depicted the balance in their accounts. McQueen promised investors that they could liquidate their accounts at any time, but most did not because they believed that their account statements were accurate and that they had made a solid investment. In July and August 2009, McQueen sent out his final account statements showing that investors had tens of millions of dollars safe and growing in their “separate accounts.” Those statements concealed the truth – that McQueen had nearly run out of money.On August 24, 2009, the IRS and FBI executed search and seizure warrants signed by Magistrate Hugh W. Brenneman. The government seized approximately $430,000 from McQueen’s accounts. Unbeknownst to the government, McQueen later brought the remaining investor funds (approximately $440,000) back from an account located in New Zealand and used it for personal expenses and to make some last ditch investments, which failed.
After the jury rendered their verdict, Defendant McQueen was remanded to the custody of the U.S. Marshals Service. A sentencing date has not been set.
This case was investigated by the IRS and FBI and prosecuted by Assistant U.S. Attorneys Matthew G. Borgula, Sally J. Berens and Heath Lynch and Securities and Exchange Commission Trial Attorney Timothy Leiman.
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Lowell Man Charged Federally for Producing Child PornographyRead the Press Release
GRAND RAPIDS, MICHIGAN – A federal grand jury returned a nine-count indictment Thursday charging a West Michigan man with producing and possessing child pornography. The indictment alleges that Travis Stiehl, 22, produced sexually explicit photographs and videos of children as young as two years old on eight different occasions from September 2011 to August 2013. The indictment also charges Stiehl with possession of approximately 2,000 images of child pornography on a hard drive.
Stiehl was arrested April 25, 2014, at his mother’s residence in Lowell, which had previously operated as a daycare facility. He has been in custody since that time. The eight production counts each carry a mandatory minimum sentence of 15 years in prison and a maximum of 30 years. The possession count carries a maximum sentence of 20 years.The charges are the result of an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Michigan State Police Internet Crimes Against Children. Assistant U.S. Attorney Tessa K. Hessmiller is the prosecutor on the case.
HSI requests that anyone who believes his or her child may have been a victim contact HSI at 616-235-3936, extension 2215.
The charges in an indictment are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.
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Federal Charges Brought Concerning Lansing Federal Income Tax Refund ScamRead the Press Release
Over $1,000,000 in tax refunds sought by tax fraudsters.
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that Takabvako Chiwocha-Crowell, age 40, currently residing in the Dallas, Texas metropolitan area, was charged in a federal indictment in the Western District of Michigan, which alleges a conspiracy to file false claims against the United States government.
The indictment alleges that over six hundred false federal individual tax returns were filed by Chiwocha-Crowell in 2011, with many of those returns submitted to the IRS listing a residential address in the Lansing, Michigan area. The indictment further alleges family members and friends assisted Ms. Chiwocha-Crowell in the scam.
The charges in an indictment are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.
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United States Attorneys Barbara L. Mcquade and Patrick Miles, Jr. Host the Michigan Reentry SummitRead the Press Release
LANSING, MICHIGAN – Reducing crime through prisoner reentry was the focus of a summit today in Lansing, organized by Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan, and Patrick A. Miles, Jr., U.S. Attorney for the Western District of Michigan.
More than 200 probation and corrections officers, law enforcement officials, service providers and other stakeholders participated in the summit at the Thomas M. Cooley Law School in Lansing.
Reentry is a key component of U.S. Attorney General Eric H. Holder, Jr.'s Smart on Crime Initiative.
The summit focused on sharing ideas and best practices for improving the success for citizens returning to the community after serving prison sentences. In contrast to the national recidivism rate of 67 percent, in Michigan, only 29 percent of offenders commit new crimes and return to prison.The summit addressed breaking through the barriers to successful reentry, such as employment, education and mental health.
Speakers included Ronald Davis, Director of the Office of Community Oriented Policing Services at the U.S. Department of Justice, and Amy Solomon, Senior Advisor at DOJ's Office of Justice Programs.
“Focusing on prisoner reentry is a smart investment because it reduces crime and saves money,” McQuade said. “When we spend $30,000 a year to imprison each offender, we can instead spend a fraction of that money on helping them succeed in the community.”“Reentry failure carries a high cost – both economically and on society – because it means more crime, more victims, more broken families as well as more burdens on law enforcement and on the judicial system,” Miles stated. “It is a multi-faceted problem that demands a coordinated solution. That is why we convened this summit.”
The event also provided an opportunity for the attendees to become aware of some of the effective reentry programs already underway such as the federal reentry courts using intensive supervised release programs for some of the highest-risk offenders returning from prison as well as the Eastern District of Michigan’s Face-To-Face initiative. This particular initiative involves meeting with offenders and informing them of the specific consequences of continued criminal activity in light of their criminal records.
The summit was hosted by the U.S. Attorney’s Office for the Eastern and Western District of Michigan, the Michigan Department of Human Services, the Michigan Department of Community Health, the U.S. Department of Justice, Bureau of Prisons, Michigan Department of Corrections, U.S. Probation for both the Eastern and Western Districts of Michigan, MAGLOCLEN, Prosecuting Attorneys Association of Michigan, Thomas M. Cooley Law School and the Michigan Sheriff’s Association.
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Coopersville Businessman Convicted of Defrauding Victims of More Than One Million DollarsRead the Press Release
Roger Andrews Created Fake and Forged Documents and Promised Victims He Would Use Their Money for an Investment in Indiana; Instead, He Gambled It Away in the Stock Market
GRAND RAPIDS, MICHIGAN – Roger Lee Andrews, 54, of Coopersville, was convicted by a jury yesterday of wire fraud in connection with a bogus land deal in Indiana. Between 2006 and 2008, Andrews, who owned R. Andrews Pallet Company in Marne, Michigan, solicited more than one million dollars from long-time friends, business acquaintances, and a bank for use in connection with an investment property in Indiana. He told some of the victims that he already owned the property and needed additional capital to fund improvements to the property so he could sell it at a profit. Andrews told others he needed funds to purchase the property. To further his scheme to defraud, Andrews create fake documents with forged signatures to make it appear as though he owned the property and had a contract to sell the property to the State of Indiana for more than $900,000.
In truth, Andrews never owned any property in Indiana, was never even involved in any deals in Indiana, and later admitted forging the documents. Instead of using his victims’ money as promised, Andrews wired almost all of the funds to his stock trading account, where he lost it by engaging in risky margin trading.
“The truly sad part of this case is that Andrews preyed on long-time friends and business acquaintances. He used those relationships and his victims’ misplaced trust as a means to commit his scheme, and they have suffered tremendously as a result. Unfortunately, this type of fraud is all too common in our district, and we remain committed to prosecuting those who engage in it,” said U.S. Attorney Patrick Miles, Jr.
The Honorable Robert J. Jonker, U.S. District Judge, presided over the trial. After the jury returned its verdict, the Court immediately revoked Andrews’ bond and ordered him to remain in the custody of the U.S. Marshal’s Office pending his sentencing.
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorneys Christopher O’Connor and Clay Stiffler.
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Man Convicted of Child Sex Trafficking in Grand RapidsRead the Press Release
GRAND RAPIDS, MICHIGAN – Eddie Allen Jackson, 31, of Grand Rapids, was convicted yesterday in federal court on three counts of child sex trafficking. From July to August 2012, Jackson recruited teenage girls in Muskegon to work for him as child prostitutes. He drove them back and forth to Grand Rapids, where he put them out on the street to solicit men for sex. He also took them to semi-vacant houses to perform acts of prostitution with men. The teens, whose identities are protected, were in 8th, 9th, and 10th grades. The jury convicted Jackson on all three counts after a two-day trial. He was returned to custody following the trial and will be sentenced in September. He faces a mandatory sentence of ten years to life in prison.
“This was the first child sex trafficking case to be prosecuted federally in Western Michigan. The local, state, and federal authorities are committed to working together to locate and stop sex traffickers. Any type of child exploitation is of course a top priority in our district, and those who prey on children will be prosecuted to the fullest extent of the law,” said U.S. Attorney Patrick A. Miles, Jr.
Jackson targeted vulnerable girls with troubled backgrounds. An agent for the Federal Bureau of Investigation (FBI) testified that the victims in this case share qualities common for child victims of sex trafficking. Specifically, he explained that pimps often target teenage girls who are unlikely to tell on the pimp and who are easy to manipulate and control because the pimp fills a void in their lives. Jackson controlled his victims by making them feel like he loved and cared about them, interspersed with threats and violence.
“The sexual exploitation of children is a heinous crime,” said Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “As part of the nationwide Project Safe Childhood initiative, the FBI’s West Michigan Based Child Exploitation Task Force will remain vigilant in combating perpetrators who attempt to prey upon the children of West Michigan, and bring to bear the full weight of the federal criminal justice system upon those who exploit the vulnerabilities of our children.”
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. The U.S. Attorney's Office; county prosecutor's offices; the Internet Crimes Against Children task force (ICAC); and federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate communities about the dangers of online child exploitation and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement.
The FBI, in conjunction with the West Michigan Based Child Exploitation Task Force (WEBCHEX), the Grand Rapids Police Department, and the Muskegon Police Department investigated the case. Assistant U.S. Attorneys Tessa K. Hessmiller and Russell A. Kavalhuna prosecuted the case.
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Former Grand Rapids Counselor and Foster Parent Sentenced to 30 Years in Prison for Child PornographyRead the Press Release
GRAND RAPIDS, MICHIGAN – Jeffrey Victor Marchione, 48, of Grand Rapids, was sentenced to 30 years in federal prison after pleading guilty to distributing and possessing over 44,000 images and videos of child pornography, U.S. Attorney Patrick Miles announced today. Marchione was a licensed counselor and mentor to numerous adolescent boys, as well as adoptive parent, foreign host parent, and foster parent to 29 children. He also pled guilty in the 17th Circuit Court, State of Michigan, to Criminal Sexual Conduct, Third Degree (Person 13-15) for having oral sex with a teenage boy. He faces sentencing on the state charge later this month.
In delivering the sentence, U.S. District Judge Robert J. Jonker stated, “In my experience, this has got to be the largest collection of child pornography I have seen in a single case.” Referring to allegations by several young men that they were molested by Marchione over the past 22 years, Judge Jonker continued, “This is a very serious underlying set of conduct and violations of the law.” The prison sentence will be followed by lifetime supervised release.
U.S. Attorney Miles commented: “People with a sexual interest in children who put themselves in positions of authority and mentorship over youth exploit the trust of everyone in our community. People like Marchione who prey on children for sexual gratification and who supply child pornography to others will be prosecuted to the fullest extent of the law.”In January 2012, two different undercover agents downloaded child pornography from Marchione through an online file-sharing program. Marchione told one of the undercover agents in a chat session that he was interested in 10-14 year-old boys and that he had sexual contact with boys in the past. In August 2012, the FBI executed a search warrant at Marchione’s home and seized computers and external hard drives containing over 44,000 images and videos of child pornography. The investigation uncovered an online chat session in which Marchione instructed another person to become an activity leader or tutor in his community to find a child to molest. He sent 150 pages of instructions on how to find and molest a child without the child telling anyone and instructing readers to find a vulnerable child who needs someone to trust.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor’s offices, the Internet Crimes Against Children task force (ICAC), and federal, state, and local law enforcement work closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood also work to educate local communities about the dangers of online child exploitation and to teach children how to protect themselves. For more information about project, please visit www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement.
The FBI investigated the case. Assistant U.S. Attorney Tessa K. Hessmiller prosecuted it.
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Habitual Batterer Sentenced to Federal PrisonRead the Press Release
MARQUETTE, MICHIGAN – Bradley Joseph Hase, 43, of Marquette, Michigan, was sentenced to the statutory maximum of 60 months in federal prison for domestic assault by an habitual offender, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge Robert Holmes Bell ordered Hase to serve three years of supervised release following his release from prison, and to pay a $100 special assessment.
On November 6, 2013, Hase pleaded guilty to count two of a federal indictment charging him with domestic assault by an habitual offender. The assault charge arose from an incident at a residence in Marquette County, Michigan, on Keweenaw Bay Indian Community reservation land on February 3, 2013. During this incident, Hase, a non-Indian, assaulted his girlfriend, a member of the Keweenaw Bay Indian Community, grabbing her by the face and throat and pulling out her hair. Hase had been convicted twice of domestic violence offenses in the 96th District Court, Marquette County, and was on probation for one of those offenses at the time of the assault in this case.
The Keweenaw Bay Indian Community Tribal Police, the Chocolay Township Police Department and the FBI investigated the case. Assistant U.S. Attorney Paul D. Lochner prosecuted the case..
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Mattawan Man Convicted of Multiple Counts of Attempted Sexual Exploitation of A Child and Other Related ChargesRead the Press Release
GRAND RAPIDS, MICHIGAN – James Alfred Beckman, Jr., 39, of Mattawan, Michigan was convicted by a jury of ten counts of attempting to sexually exploit a child by trying to make his own child pornography, one count of attempting to coerce and entice a child to commit a sex act, two counts of distributing child pornography, and two counts of receiving child pornography, U.S. Attorney Patrick A. Miles, Jr. announced today. The jury returned the guilty verdicts, and one acquittal on the eleventh charge of attempted sexual exploitation, after hearing testimony and reviewing evidence presented during a two-week trial. Beckman faces up to life imprisonment for these offenses; he will be required to serve a term of supervised release after his prison term has been completed; and he will also be required to register as a sexual offender. The date of Beckman’s sentencing has not been set.
The evidence presented at trial showed that Beckman sexually abused and exploited two young children during 2012. He streamed and attempted to stream live video of this abuse and exploitation to others. In exchange, he received child pornography and other things he deemed of value. Beckman’s conduct came to light when one of his victims disclosed the abuse to another adult. The Michigan State Police and the Federal Bureau of Investigation then launched an investigation. The investigation revealed a network of individuals trafficking in child pornography. Two of Beckman’s accomplices testified against him.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.
The Federal Bureau of Investigation (FBI) and the Michigan State Police (MSP) investigated the case. Assistant U.S. Attorneys Sean M. Lewis and Timothy P. Verhey prosecuted the case.
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Sault Ste. Marie Casino Thieves Sentenced to PrisonRead the Press Release
MARQUETTE, MICHIGAN – Six defendants convicted of conspiring to commit theft
from a gaming establishment on Indian lands were sentenced to federal prison, U.S. Attorney
Patrick A. Miles, Jr. announced today. U.S. District Judge Robert Holmes Bell sentenced each of
the defendants as follows:- Joe Michael Koster, 63, of Claremore, Oklahoma was sentenced to 36 months in prison
followed by 3 years of supervised release.
- Cheryl Rose Steinsiek, 47, of Claremore, Oklahoma was sentenced to 13 months in
prison followed by two years of supervised release.
- Michael Leo Patterson, 46, of Tulsa, Oklahoma, was sentenced to 18 months in prison
and two years of supervised release.
- Koster, Steinsiek, and Patterson were all ordered to pay $308,370 in restitution to the
Kewadin Casino.
- Jeffrey Paul Neighbors, 36, of Tulsa, Oklahoma, was sentenced to nine months in prison
and three years of supervised release, and was ordered to pay $67,000 in restitution to the
Kewadin Casino.
- Vannessa Robb, 57, of Haskell, Oklahoma was sentenced to one month in prison and two
years of supervised release, and must pay $150,000 in restitution to the Kewadin Casino.
- Bruce Robb, 58, of Haskell, Oklahoma was sentenced to six months in prison and two
years of supervised release, and was ordered to pay $150,000 in restitution.
Each of the defendants pleaded guilty last October to a count of conspiracy to commit theft from a gaming establishment on Indian lands. The charges arose from an investigation that began with an anonymous tip identifying Koster, Steinsiek, and Patterson as being involved in a scheme to steal money from the Kewadin Casino through the use of a device that tricked machines into payouts. Video surveillance from the Kewadin Casino showed the defendants perpetrating the scheme over three weekends in June 2011. This video surveillance showed that Koster would use a device to trick the gaming machines into payouts while one or more of his co-conspirators would act as lookouts for him and carry the money stolen from the machines to the cash cage to convert from quarters to paper currency. Koster and Patterson were arrested by the Sault Ste. Marie Tribal Police after being observed by security personnel running the scheme.
The subsequent investigation conducted by agents of the Federal Bureau of Investigation in the Marquette, Michigan and Tulsa, Oklahoma, offices revealed that Koster, Steinsiek, and Patterson began the scheme to steal money from gaming machines two years prior, in June 2009. The investigation also revealed that Bruce and Vannessa Robb joined the conspiracy in June 2010, and Neighbors joined the conspiracy in winter 2011. Koster, together with one or more of his co-conspirators, traveled to Sault Ste. Marie on 52 weekends over a two-year period from June 2009 to June 2011 to steal from the Kewadin Casino. The court found that Koster and his co-conspirators stole approximately $310,000 from the Kewadin Casino over the course of the two-year period.
The Sault Ste. Marie Tribal Police and agents from the FBI investigated the cases. Assistant U.S. Attorney Paul D. Lochner prosecuted the cases.
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- Joe Michael Koster, 63, of Claremore, Oklahoma was sentenced to 36 months in prison
Two Grand Haven Men Sentenced for Stealing Firearms from Gun Stores in Ottawa and Muskegon CountiesRead the Press Release
GRAND RAPIDS, MICHIGAN – Muskegon County Prosecutor D.J. Hilson, Ottawa County Prosecutor Ronald J. Frantz, and ATF Special Agent in Charge, Steven Bogdalek joined U.S. Attorney Patrick Miles in announcing that Joseph Jerry Sweet, age 33, and Ronald Patrick Cook, age 28, both from the Grand Haven area, were sentenced for their roles in stealing firearms from Federal Firearms Licensees. Cook received a sentence of 156 months, and Sweet received a sentence of 188 months. The defendants were ordered to pay restitution in the amount of $23,339.25 for the unrecovered firearms and the damage to the stores. Both were ordered to serve a three-year period of supervised release following their prison sentences.
Sometime during the night on June 27, 2013, the two defendants broke into the Renegade River store in Spring Lake, Michigan, stealing eight firearms. On July 13, 2013, the two broke into the Grasmeyer Brothers Gun & Supply Shop in Dalton Township, Michigan, at approximately 12:30 a.m., stealing 24 firearms, including twenty handguns and four rifles. Nine of the Grasmeyer firearms were later recovered. Most of the remaining firearms were sold or traded to drug dealers, including an individual who was the defendant’s main heroin supplier.
Federal law prohibits the theft of firearms from Federal Firearms Licensees. Both stores are federally-licensed firearms dealers. The defendants faced a maximum sentence of twenty years in prison.
This case resulted from a coordinated investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Muskegon County Sheriff’s Department, the Grand Haven Public Safety Department, the Spring Lake/Ferrysburg Police Department, and the Michigan State Police-West Michigan Enforcement Team (WEMET).U.S. Attorney Miles commented: “These significant federal sentences are the result of an on-going cooperative state and federal effort to combat gun violence in our communities, and they underscore the danger posed by this criminal behavior.
Muskegon County Prosecutor Hilson added: “When it comes to gun violence, the Muskegon County Prosecutor’s Office will continue to work hand in hand with the U.S. Attorney’s Office to make sure that those individuals who engage in illegal gun activity are removed from our neighborhoods so that we as a community are able to enjoy safe days and quiet nights.”
Ottawa County Prosecutor Frantz stated: “We appreciate the cooperative efforts of both federal and local law enforcement in bringing these matters to a just conclusion.” ATF Special Agent in Charge Bogdalek added, “we understand that firearms which are stolen typically end up in the hands of violent criminals that threaten the safety of our communities every day. Criminals should know that when they steal firearms from a Federal Firearms Licensee (FFL), ATF will respond with our state and local law enforcement partners to apprehend them.”
The Honorable Robert J. Jonker presided over this case.
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Grand Rapids Man Who Sold Gun Used in Mass Murder Sentenced to the Statutory Maximum Term of Ten YearsRead the Press Release
GRAND RAPIDS, MICHIGAN – Michael James Allen, of Grand Rapids, Michigan, has been sentenced today to ten years (120 months) in prison – the statutory maximum – for his role in transferring a Glock 9mm semiautomatic pistol to multi-convicted felon Roderic Dantzler, who used it to kill seven people. Allen previously pled guilty to being a felon in possession of that pistol, as he was also a convicted felon and prohibited from possessing any firearm. During his plea hearing, Allen admitted to selling the Glock pistol to Dantzler. In sentencing Allen, Chief U.S. District Judge Paul Maloney commented that “the wreckage of Mr. Allen’s actions is unspeakable,” noting that Allen knew Dantzler was dangerous and unstable.
On July 7, 2011, Dantzler used the Glock 9mm semiautomatic pistol to kill his wife, his twelve-year-old daughter, his mother and father-in-law, a former girlfriend, that girlfriend’s sister, and her ten-year-old daughter. Dantzler also shot at the driver of another vehicle during a road-rage incident; he attempted to kill police officers; he fled from the police at high rates of speed; and he kidnapped three hostages before taking his own life – leaving the total death toll at eight.
That same day, the Grand Rapids Police Department (GRPD) contacted the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for assistance in determining who was responsible for providing that Glock pistol to Dantzler. A two-year federal investigation ensued, leading to the convictions of three individuals, including Allen, each of whom illegally possessed the Glock pistol and transferred it to a known convicted felon.
Joseph Krul, a convicted felon and admitted drug dealer, was sentenced on October 25, 2013, to 63 months’ imprisonment for his role in this case. A third individual, who cooperated in the investigation and who played a key role in the successful prosecution of Allen was allowed to plead to a state charge of being a felon in possession of the Glock pistol. The cooperator wore a wire during two meetings with Allen in which he recorded incriminating statements Allen made, including threats to kill cooperating witnesses. At one point, Allen stated: “It’s hard to testify against someone when you’re dead.”
U.S. Attorney Patrick Miles underscored the seriousness of the offense, noting that this case illustrates the need to prevent the illegal trafficking in firearms. “This was a tragedy that was entirely avoidable. Selling a semiautomatic pistol to Dantzler was like lighting a match to a powder keg. Bringing those to justice who provided Dantzler that firearm required great individual efforts by members of the GRPD and ATF in a lengthy and thorough joint investigation. It is our hope that this community and the victims’ family members find some measure of solace and closure from that effort and this outcome.”
“Michael Allen put a firearm into the hands of a violent criminal,” said ATF Special Agent in Charge Steven Bogdalek. “Although the defendant didn’t shoot any of victims killed by Roderick Dantzler, he willingly provided the handgun that was used to commit heinous acts of violence.”
GRPD Captain Jeffrey Hertel added that he is “hopeful that the disposition of the Michael Allen case provides more answers to the families that lost loved ones that fateful day. The intensive investigation represents the strong partnership between the ATF and the Grand Rapids Police Department. The investigation was possible because of the continued commitment to safety in our neighborhoods by the U.S. Attorney’s Office.”
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Kentwood Pharmacy Owner and Thirteen Additional Employees Face Federal ChargesRead the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that a federal grand jury returned a Second Superseding Indictment levelling additional charges against Kim Mulder, the CEO of Kentwood Pharmacy, and thirteen employees of the pharmacy.
The indictment charges that Mulder conspired with Richard Clarke, Kentwood Pharmacy’s Director of Sales, and Lawrence Harden, Kentwood Pharmacy’s Chief Pharmacist, to return, restock and re-dispense drugs that were previously dispensed to nursing homes and adult foster care homes. By allegedly submitting claims for drugs that were misbranded, adulterated and dispensed in violation of federal and state laws, the indictment charges that the defendants defrauded Medicare, Medicaid and Blue Cross Blue Shield of Michigan. The indictment alleges that Kentwood Pharmacy received in excess of $70,000,000 from these health care benefit programs, and the government is seeking to forfeit more than $60,000,000 as a result of the alleged health care fraud. Conspiracy to commit health care fraud is punishable by up to ten years of imprisonment and a fine of $250,000 or twice the gross gain of the offense.
Mulder, Clarke, Harden and six other Kentwood Pharmacy employees also face a charge of conspiracy to misbrand drugs which was part of an earlier indictment. The conspiracy to misbrand drugs alleges that the defendants placed returned drugs into stock bottles, which bore incorrect lot numbers and expiration dates, and into amber pill vials which bore no lot numbers or expiration dates. The misbranding conspiracy also charges that a number of the defendants took actions to conceal this conduct by sorting returned drugs at unlicensed off-site locations, including a strip mall office and the basement of the chief pharmacist’s home. Conspiracy to misbrand drugs is punishable by up to five years of imprisonment and a $250,000 fine.
A third charge alleges that Mulder, chief pharmacist Lawrence Harden, and a billing manager conspired to create false prescription records. This charge is punishable by up to five years of imprisonment and a $250,000 fine.
Mulder also faces three counts of money laundering and a single count of structuring monetary transactions to avoid bank reporting requirements. The money laundering charges are each punishable by up to ten years of imprisonment and a $250,000 fine and the structuring charge is punishable by up to three years of imprisonment and a $250,000 fine.
In addition to the felony charges, the Second Superseding Indictment also charges five additional Kentwood Pharmacy Employees, who were allegedly involved with the sorting and packing of the returned drugs, with misdemeanor misbranding offenses punishable by up to one year of imprisonment.
In November 2013, U.S. District Judge Janet T. Neff sentenced three semi-retired pharmacists to fines ranging from $15,000 to $30,000 on charges of felony misbranding of drugs related to their part-time employment at Kentwood Pharmacy.
The ongoing investigation of this matter involves the FDA, FBI, DEA, HSS-OIG, IRS, and the Michigan State Police. Assistant U.S. Attorney Ray Beckering is the prosecutor.
The charges in any indictment are merely accusations, and these defendants are presumed innocent until and unless proven guilty in a court of law.
If Michigan residents or medical professionals suspect possible violations of law or other dangerous practices involving pharmacies or prescription drugs, they can contact:
the FDA at http://www.fda.gov/ICECI/criminalInvestigations/default.htm, or
the DEA at http://www.justice.gov/dea/ops/submit.php.END
Defendant Pleads Guilty to Submitting False Claims to the Federal GovernmentRead the Press Release
Maple Rapids Resident James Ortman Admits to Fraud in Conjunction with Federal Grants for Buildings he Formerly Owned in St. Johns, Michigan
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr., announced today that James Francis Ortman, 58, of Maple Rapids, Michigan, pled guilty to a felony information filed on January 8, 2014, that charged him with submitting false claims to the U.S. Department of Housing and Urban Development (HUD) in conjunction with grants awarded to him in 2008 and 2009. The grants were administered by the City of St. Johns and the Michigan State Housing Development Authority (MSHDA).
“When used appropriately, HUD grants encourage development and new job opportunities in our local communities,” said U.S. Attorney Miles. “This office will vigorously pursue those who seek to line their own pockets by diverting from their intended purpose scarce grant monies that are funded by the hard-working taxpayers of this district.”
Ortman admitted at his change of plea hearing before United States Magistrate Judge Ellen S. Carmody that in 2008 the City of St. Johns awarded him a federal grant as part of a Downtown Façade Project for his building located at the corner of North Clinton and East Walker streets. In order to receive the grant, Ortman represented to the City that the façade improvements would cost $416,999, and that the project would ultimately create four permanent jobs for low and moderate-income persons. The grant provided that if the project truly cost that amount, and if Ortman invested $216,999 of his own funds into the project, HUD would fund the remaining cost of $200,000. Ortman admitted at the hearing that he did not invest his own funds as represented and that he submitted false documents to the federal government to make it appear as if his actual costs equaled the projected amount. As a result, he received the full amount of the grant ($200,000), when he should have received less than half of this amount.
Ortman further admitted that he committed fraud in conjunction with a Rental Rehabilitation Grant that the City awarded to him in 2009. The terms of that grant required Ortman to construct apartments for income-qualified individuals in various buildings that he owned in St. Johns. Ortman admitted that he submitted claims for grant payments to the federal government for work that he did not actually complete and that he diverted those grant payments to other business ventures that were in financial trouble. As a result, many of the income-based apartments were never completed. Ortman caused a combined loss of over $200,000 to the federal government in conjunction with the façade and rental rehabilitation grants.
“HUD’s Office of Inspector General, working with the U.S. Attorney’s Office, will relentlessly hunt for predators who, despite their best efforts to conceal their theft, have swindled the taxpayer and hurt Michigan’s neediest families,” said Barry McLaughlin, Special Agent in Charge, HUD-OIG Region V. “Theft of HUD grant funding amounts to stealing from hard-working taxpayers,” added Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “The FBI, in concert with our law enforcement partners, remains dedicated to pursuing those who selfishly misappropriate public funds intended for the public good.”
Ortman is awaiting his sentencing hearing, at which time Ortman will face a maximum term of imprisonment of five years, a fine of up to $250,000, and will be ordered to pay restitution to HUD. The Detroit office of the U.S. Department of Housing and Urban Development-Office of Inspector General, along with the Lansing office of the FBI, investigated the case. The prosecution of the case is being handled by Assistant U.S. Attorney Ronald M. Stella.
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Grand Rapids Man Sentenced to 15 Years in Federal Prison for Seeking Out Child Pornography While on Supervised Release for A Prior Child Pornography ConvictionRead the Press Release
GRAND RAPIDS, MICHIGAN – Jack Alan Groenendal, 54, of Grand Rapids, Michigan was sentenced on January 27, 2014 to 15 years in federal prison for attempting to receive child pornography, and 10 years for attempting to access child pornography with the intent to view it, U.S. Attorney Patrick A. Miles, Jr. announced today. The sentences will run concurrently. In addition to the prison term, Chief U.S. District Judge Paul Maloney imposed an eight-year term of supervised release that will commence once Groenendal is released from imprisonment. Groenendal will also be required to maintain his registration as a sexual offender.
A jury convicted Groenendal of these offenses in October of 2013. The evidence at trial showed that between July 6 and August 9, 2011, Groenendal made a deliberate and sustained effort to seek out child pornography on the Internet and to bring that child pornography onto his computer where he could view it, control it, and use it for his own purposes. At the time Groenendal committed these offenses, he was on supervised release for a prior conviction for possessing child pornography. Groenendal’s probation officer uncovered his activity and enlisted the assistance of law enforcement. Groenendal’s computer was subsequently seized pursuant to a search warrant, and forensic analysis revealed the presence of child pornography on his hard drive.
U.S. Attorney Patrick A. Miles, Jr. underscored the seriousness of these offenses, noting that “the possession, receipt, transportation, distribution, and viewing of child pornography perpetuates the harm to the victims depicted in images, validates and normalizes the sexual exploitation of children, and fuels a market, thereby leading to further production of images. The seriousness of the offenses in this case is amplified by the fact that the defendant was under supervision for a previous child-pornography conviction at the time.”
The Department of Homeland Security, Homeland Security Investigations (HSI) investigated the case. Assistant U.S. Attorneys Sean M. Lewis and Tessa K. Hessmiller prosecuted the case.
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Advocates and Leaders for Police and Community Trust (alpact) Southwest Michigan Group FormedRead the Press Release
Co-Chairpersons Announced
GRAND RAPIDS, MICHIGAN – The U.S. Attorney’s Office, Western District of Michigan is pleased to announce its partnership with ALPACT established in 2013 in Benton Harbor, Michigan. The purpose of ALPACT is to examine issues affecting police and community relations and ensure equitable enforcement of laws, including: racial profiling, police discretion, use of force, recruitment and training, citizen complaint processes, community partnering, and police leadership and management disciplinary practices.
ALPACT of Southwest Michigan is comprised of leaders and members of the community in Southwest Michigan, civil rights and civil liberties organizations, and leaders from the law enforcement community.
The Co-Chairpersons for this year will be Lisa Peeples-Hurst of Benton Harbor and Milton Agay, Chief of Police, Oronoko Township Police Department.
U.S. Attorney Patrick A. Miles, Jr. is honored to be a part of the important work to be accomplished by ALPACT in 2014. He said “Communities need to work together with law enforcement, civil rights groups and government organizations to focus on issues and strategies to create improved methods of addressing serious concerns.” Mr. Miles also thanks the new ALPACT co-chairs for their dedication and leadership.
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Kentucky Man Admits Stealing Three Motor Homes from Western Michigan Rv DealersRead the Press Release
Defendant admits using false identities to “launder” the money from the sale of the stolen motor homes.
GRAND RAPIDS, MICHIGAN – Walter J. Nunley, a resident of Kentucky, entered guilty pleas today to all nine felony charges against him in a hearing before U.S. District Court Judge Robert Holmes Bell.
Three of the charges were for interstate theft of motor vehicles (motor homes), each of which carries a maximum penalty of ten years in prison. Another three charges were for interstate theft of property (the contents of the motor homes), each of which also carries a maximum penalty of ten years in prison. Nunley also pled guilty to conspiring to engage in interstate theft of property, which carries a maximum penalty of five years in prison. Each of these six charges carry a fine of $250,000. With regard to the money laundering, Nunley also admitted at his guilty plea hearing to engaging in a money laundering conspiracy to conceal or hide the “proceeds” he obtained from the sale of the stolen motor homes. That offense carries a maximum penalty of twenty years in prison, a fine of $500,000. Finally, Nunley pled guilty to making false statements to a federal agent, which offense carries a maximum penalty of five years in prison and a fine of $250,000. A $100 special assessment is imposed for each count of conviction. Nunley agreed to restitution and forfeiture in connection with the nine charges of conviction.
Nunley admitted that during 2012, he made two trips into Western Michigan to steal motor homes. In March 2012, he stole a motor home from the Holland Motor Home business. In May 2012, he stole two more motor homes from Midway RV Center located in Grand Rapids. As part of the criminal conspiracy, the conspirators stole three additional motor homes from businesses located across the United States. The total losses for the six motor home thefts are estimated to exceed $1,500,000. Nunley admitted that he and another man obtained false titles for the stolen motor homes and then sold them under false identities.
Judge Bell remanded Nunley to custody following the guilty plea hearing. No date has yet been set for the sentencing hearing.
The FBI has been handling the investigation and Assistant U.S. Attorney Mike MacDonald is the prosecutor.
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U.S. Attorney’s Office Collects over $8.1 Million from Civil & Criminal Actions and Forfeitures in Fy 2013Read the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that the U.S. Attorney’s Office for the Western District of Michigan collected $5,545,164.37 in criminal and civil actions in Fiscal Year 2013. Of this amount, $3,193,153.56 was collected as fines, penalties, and restitution in criminal actions and $2,352,010.81 was collected in civil actions. Working with partner agencies and divisions, the U.S. Attorney’s Office for the Western District of Michigan also collected $2,560,915 from civil, criminal, and administrative forfeiture actions in FY 2013.
Additionally, the U.S. Attorney’s Office for the Western District of Michigan worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $529,531.18 in cases pursued jointly with these offices. Of this amount, $29,531.18 was collected in criminal actions and $500,000 was collected in civil actions.
Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending September 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the Department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
“The U.S. Attorney’s Office for the Western District of Michigan is actively working to make sure crime does not pay,” said U.S. Attorney Miles. “We are using all legal tools available to protect the public.”
Among the more significant recoveries in FY 2013, the U.S. Attorney’s Office collected over $1,000,000 in civil damages and criminal restitution in a parallel civil and criminal healthcare fraud case against Babubhai Rathod. Rathod, a disgraced physical therapist, pled guilty to one count of conspiring to violate the federal Anti-Kickback Statute, voluntarily agreed to a 20-year exclusion from federal healthcare programs, and liquidated his business holdings and certain personal property to pay the civil damages and criminal restitution. In a separate case, the U.S. Attorney’s Office collected $988,366 in criminal restitution from Elaine Dawson, the owner of five cinemas in Bellaire, Petoskey, Gaylord, Mackinaw City, and Cheboygan, Michigan. Dawson pled guilty to tax evasion. She routinely under-reported the number of patrons who bought movie tickets, and under-reported her receipts from sales of concessions, gift certificates, and other items, then skimmed the cash from the unreported sales for personal use.
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Proceeds generated from civil, criminal, and administrative forfeiture actions are deposited in the Department of Justice Assets Forfeiture Fund or the Treasury Department’s Treasury Forfeiture Fund. These funds are used to restore funds to crime victims and for a variety of law enforcement purposes through the Department of Justice’s equitable sharing program. In FY 2013, the U.S. Attorney’s Office for the Western District of Michigan distributed $330,377 to state and local law enforcement agencies through the equitable sharing program.
These FY 2013 civil and criminal collections and forfeiture figures total $8.1 million for the U.S. Attorney’s Office for the Western District of Michigan. By way of comparison, the total figures for the office in FY 2012 and FY 2011 were approximately $8.2 million and $7.5 million, respectively.
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Rockford Man Pleads Guilty to Income Tax EvasionRead the Press Release
GRAND RAPIDS, MICHIGAN – Robert L. Harley, Jr, of Rockford, Michigan, pleaded guilty to income tax evasion on a 2008 federal income tax return, U.S. Attorney Patrick A. Miles, Jr announced today. U.S. Attorney Miles was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation.
According to court records, during the 2008 tax year, Harley was working as a manager for Club Concepts, Inc., doing business as the Intersection Bar and Lounge. During this time period, Harley received gross income totaling over $174,500 and purposely filed a false federal income tax return reporting his income as $9,080 with zero tax due. In addition, Harley failed to pay over $32,592 in tax due and owing to the Internal Revenue Service.
Harley entered the guilty plea in U.S. District Court before Magistrate Judge Ellen S. Carmody.
“Harley deliberately filed a false tax return, failing outright to report almost 95% of his adjusted gross income,” said Special Agent in Charge Erick Martinez. “We all have to pay our fair share and his conduct is unacceptable.”The maximum penalty for failing to file federal tax return is imprisonment of not more than five years and a $250,000 fine per each count.
The investigation of this case was conducted by special agents of the Internal Revenue Service, and prosecuted by Assistant U.S. Attorneys Don Davis and Rene Shekmer.
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Grand Rapids Man Sentenced to 23 Years in Prison and Forfeits House for Child Pornography ConvictionRead the Press Release
GRAND RAPIDS, MICHIGAN – Gary William Hampton, 63, of Grand Rapids, was sentenced to 23 years in federal prison for producing and possessing child pornography. Hampton’s house, where the abuse occurred, was forfeited as a result of the conviction. U.S. Chief District Judge Paul L. Maloney explained, “The offense conduct in this case is horrendous. Aggravating factors include extortion of the young person and supplying him with controlled substances. I am also very concerned with the defendant’s statements to his friend that there was no victim here.” The prison term will be followed by 10 years of supervised release.
U.S. Attorney Patrick A. Miles, Jr. commended the lengthy sentence stating, “Protecting children from sexual exploitation is a high priority for this U.S. Attorney’s office. The sentence and the forfeiture of the defendant’s house should send a deterrence message to others who might consider creating the supply and the demand for child pornography offenses. If you commit a child pornography offense inside your home, you risk losing your home as part of the sentence.”
The case came to the attention of law enforcement when the victim reported that he was sexually abused by Hampton from 2003 to 2007, when the victim was 13 to 17 years old. Hampton gave money and illegal drugs to the boy in exchange for sex, and Hampton threatened the victim to keep it a secret. Police located sexually explicit photographs of the victim posing in Hampton’s house and engaging in various sex acts. Hampton pled no contest in federal court to a two-count indictment charging Production and Possession of Child Pornography.
As part of a coordinated investigation and prosecution, the Kent County Prosecutor’s Office pursued prosecution in state court for the underlying sexual abuse of the minor. On August 15, 2013, Hampton pled guilty in the 17th Circuit Court in Grand Rapids, MI, to one count of Criminal Sexual Conduct – First Degree and was sentenced to 10-15 years in jail. The federal and state sentences will run concurrently.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.The Federal Bureau of Investigation (FBI) and Grand Rapids Police Department (GRPD) investigated the case. Assistant U.S. Attorney Tessa K. Hessmiller prosecuted the case.
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Leader of Detroit-based Identity-theft Ring SentencedRead the Press Release
Organizer of Traveling Fraud Scheme to Serve 10.5 Years in Federal Prison
GRAND RAPIDS, MICHIGAN – The lead defendant in a prosecution that resulted in felony convictions of eight Detroit residents for identity theft, wire fraud, and conspiracy was sentenced today by Chief U.S. District Judge Paul L. Maloney. Charles J. Finley, 26, will serve 10.5 years in federal prison for his crimes, and was also ordered to pay restitution of $95,489 to the victims of the crime.
The investigation, which was conducted by the Grand Rapids office of the U.S. Secret Service, began in May 2012 after loss-prevention investigators of Meijer corporation became aware that teams of identity thieves were visiting stores in the Lansing and Grand Rapids area and purchasing high-value Meijer gift cards using credit cards that had been re-encoded with account data from compromised credit card accounts. The in-store cards were then used to purchase large numbers of expensive electronic devices such as iPads, iPhones, and laptop computers. Already familiar with similar “carding” schemes based on previous successful investigations, through which it had developed a close working relationship with Meijer loss-prevention specialists, the Secret Service opened an investigation that eventually identified most of the participants in this latest appearance of the fraud. The subsequent prosecution resulted in the following sentences: Sharonique S. Pointer, 22, will serve 24 months; Mark A. Houston, Jr., 24, will serve 36 months; Donald D. Peterson, Jr., 26, will serve 33 months; Gary K. Smith-Brown, Jr., 27, will serve 36 months; Adrian R. Evans, 26, will serve 75 months; and Dewain J. Clark, 29, will serve 24 months. Each defendant was also ordered to pay restitution to the victims of the offenses. Deaunte G. Finley, the last defendant to be arrested and convicted, is scheduled to be sentenced on 13 January 2014.
Commenting on the case, U.S. Attorney Patrick A. Miles, Jr., stressed his Office’s commitment to pursue all forms of identity-theft, which he described as one of the “most serious, and growing, forms of white-collar crime.” Said Miles, “identity theft doesn’t just cause financial harm, it damages the hard-earned reputations of productive members of society. Identity thieves who think that West Michigan is fertile ground to commit this crime are making a serious mistake. These defendants learned that fact the hard way.”
Resident Agent-in-Charge Kim Cheatle, U.S. Secret Service, echoed Miles. “This investigation demonstrated the commitment the Secret Service has to partner with private industry to pursue financial crimes cases. This case in particular had a significant community impact. We are thankful for the assistance rendered by the Meijer Corporation, and the relationship we have with the U.S. Attorney’s Office, which culminated in the successful prosecution of this group.”
The case was prosecuted by Assistant U.S. Attorney Hagen W. Frank, who leads the U.S. Attorney’s Office identity-theft task force.
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Bangor Man Sentenced to 15 Years for Producing Child PornographyRead the Press Release
GRAND RAPIDS, MICHIGAN – Thomas L. Wright, 63, of Bangor, Michigan, was sentenced in federal court to a term of fifteen years’ incarceration for producing child pornography. Wright was also sentenced to a lifetime term of supervised release. In sentencing Wright, Judge Robert Holmes Bell chastised Wright for sexually exploiting the victim.
Wright befriended a sixteen year-old boy and began a sexual relationship with the boy. In March 2009, Wright took the boy on a trip to Florida and visited Disney World. While in Florida, Wright took multiple sexually explicit pictures of the boy. Wright’s conduct was discovered in 2011, when Wright was identified as a suspect in a ring trading child pornography. Wright was confronted by federal agents from Homeland Security Investigations, Immigration and Customs Enforcement, and confessed to having a sexual relationship with the then-eighteen-year-old-boy and to taking nude pictures of the boy when the boy was sixteen. Wright’s computer was examined and agents found Wright’s collection of child pornography. Wright was convicted after trial of five counts of producing child pornography, transporting child pornography across state lines, and possessing child pornography.
U.S. Attorney Patrick A. Miles, Jr., said, “Protecting children is one of our community’s highest priorities. Children should look to adults for guidance and support, and should not have to fear being exploited by them. We cannot abide those who betray that trust and prey on children for their sexual desires.”
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from sexual exploitation and abuse. The U.S. Attorney’s Office, county prosecutor’s offices, an Internet Crimes Against Children (ICAC) task force, federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who sexually exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov.
The investigation of this matter was conducted by HSI-ICE. Prosecution of this case was handled by Assistant U.S. Attorney Daniel Mekaru.
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U.S. Attorney’s Office for the Western District of Michigan Honored by Department of Defense for Support of Employees Serving in the Guard and ReserveRead the Press Release
GRAND RAPIDS, MICHIGAN – Michigan Employer Support of the Guard and Reserve (ESGR), a Department of Defense office, joined U.S. Attorney Patrick A. Miles, Jr., in announcing today that the US Attorney’s Office for the Western District of Michigan was honored with a Patriot Award in recognition of its extraordinary support of its employees serving in the United States military Reserve Components. U.S. Attorney Miles accepted the award on behalf of the office.
According to Paul Ryan, Michigan ESGR State Chair, “the Patriot Award was created by ESGR to publicly recognize individuals who provide outstanding patriotic support and cooperation to their employees, who like the citizen warriors before them, have answered their nation’s call to serve. U.S. Attorney Patrick A. Miles, Jr. and the U.S. Attorney’s Office for the Western District of Michigan were nominated for being highly supportive of the Reserve Service. Supportive supervisors are critical to maintaining the strength and readiness of the nation’s Guard and Reserve units.”
U.S. Attorney Patrick A. Miles said, “Many of my relatives served in the U.S. Military so I place great value on hiring veterans and supporting Reserve Component members as they complete their military obligations throughout the year. The skills, training, and contributions to the U.S. Attorney’s Office of these outstanding citizens is critical to accomplish the mission of the U.S. Attorney’s Office and the Department of Justice.”
ESGR, a Department of Defense office, seeks to foster a culture in which all employers support and value the employment and military service of members of the National Guard and Reserve in the United States. ESGR facilitates and promotes a cooperative culture of employer support for National Guard and Reserve service by developing and advocating mutually beneficial initiatives, recognizing outstanding employer support, increasing awareness of applicable laws and policies, resolving potential conflicts between employers and their service members, and acting as the employers’ principal advocate within the Department of Defense. Paramount to ESGR's mission is encouraging employment of Guardsmen and Reservists who bring integrity, global perspective and proven leadership to the civilian workforce.
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Four Men Convicted in I-96 Cocaine SeizureRead the Press Release
The two out-of-state defendants sent to prison for 15 and 30 years.
GRAND RAPIDS, MICHIGAN – Four men have been convicted and two of them already sentenced in connection with the seizure of approximately three kilograms of cocaine and crack cocaine on I-96 in Ingham County, Michigan, Patrick A. Miles, U.S. Attorney for the Western District of Michigan announced today. Luis Edwards, the suspected source of the drugs, was sentenced on November 25 to fifteen years and eight months in prison. In August, Israel Mendez, a drug courier, was sentenced to thirty years in prison. The two men who were originally caught with the drugs near Lansing, Gilbert Albarez and Rogelio Ruiz, have now pled guilty and await sentencing.
The drug seizure took place on October 24, 2012, when an Ingham County deputy sheriff stopped a car on I-96 near Lansing, Michigan. Inside the car, the deputy found approximately three kilograms of cocaine and crack cocaine. The occupants of the car, Albarez, age 37, and Ruiz, age 42, both from Lansing, were subsequently indicted in federal court for possession of cocaine and crack cocaine with intent to distribute. Both of them pled guilty to that charge on November 13, 2013.
Investigative efforts by the FBI and the Tri-County Metro Narcotics Unit following the seizure revealed that Albarez and Ruiz had picked up the drugs in Columbus, Ohio, and were transporting them to Lansing when they were stopped. Law enforcement set up a reverse “sting” by arranging to return the drugs to their suspected source. On October 25, 2012, Mendez, from Ft. Wayne, Indiana, came to Lansing to retrieve the drugs and law enforcement promptly arrested him. Mendez was found guilty by a jury in April of possessing with intent to distribute the seized drugs. The Hon. Paul L. Maloney, Chief Judge, sentenced Mendez on August 19 to thirty years in prison based on his extensive criminal history.
Edwards, age 43, the suspected drug supplier, was arrested when he crossed the border from Mexico into the United States near Hidalgo, Texas, on March 22, 2013. He pled guilty to conspiracy to possess with intent to distribute the seized drugs in August, and Chief Judge Maloney sentenced him to 188 months in prison last week. Edwards is also subject to deportation at the conclusion of his sentence.
These convictions were the result of a Drug Task Force investigation in the Lansing, Michigan, area led by the FBI and the Tri-County Metro Narcotics Unit. The case was prosecuted by Assistant U.S. Attorney John Bruha.
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Lansing Man Sentenced to 25 Years in Federal Prison for Role in Drug Dealing in Mount Vernon Area of Northwest LansingRead the Press Release
Lansing and ATF Investigation Results in 80% Decrease in Calls for Service in Area
GRAND RAPIDS, MICHIGAN – Merza Mizori, 24, of Lansing, Michigan was sentenced to 300 months (25 years) in federal prison for distributing over 28 grams of crack cocaine, U.S. Attorney Patrick A. Miles, Jr., Acting Special Agent in Charge (SAC) Daryl R. McCrary, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and Chief Michael Yankowski, Lansing Police Department (LPD), announced today. In addition to the prison term, U.S. Chief District Judge Paul L. Maloney imposed five years of supervised release that commences once Mizori is released from imprisonment.
In 2010, LPD and ATF initiated a joint investigation into criminal activity in the Mount Vernon Public Housing area as a result of a large volume of calls for service in the area for drug trafficking and firearm violence. The joint investigation identified Mizori, who lived in a Mount Vernon unit, as one of the individuals responsible for dealing crack cocaine in the area. In January 2013, a federal grand jury indicted Mizori, his brother Serwan Mizori, 23; Christapher Jones, 22; Gregory Dalton, 24; and DeShun Dalton, 22, with multiple drug charges.
Mizori pled guilty to the distribution charge and the others pled guilty to various charges. Chief Judge Maloney sentenced the others to federal prison as follows: Serwan Mizori to 240 months (20 years) in prison and five years’ supervised release for his conviction of distribution of crack cocaine; Jones to 120 months (10 years) in prison and five years’ supervised release for his conviction of distribution of over 28 grams of crack cocaine; Gregory Dalton to 106 months in prison and four years’ supervised release for his conviction of distribution of crack cocaine and possession of a firearm in furtherance of drug trafficking; and DeShun Dalton to 51 months in prison and three years’ supervised release for his conviction of distribution of crack cocaine.
U.S. Attorney Miles noted the “investigation and prosecution were a perfect example of how federal and local authorities can work together to address specific problems in our communities, especially firearm violence and drug trafficking.” Acting SAC McCrary noted that “ATF values the strong working relationship with the Lansing Police Department that makes this type of community impact possible.” Lansing Police Department Chief Yankowski stated, “The community is in fact safer as proven by departmental crime analysis that reveals an 80% decrease in calls for service to the Mount Vernon area after this group was arrested from the area in January 2013.”.
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Lyons Man Sentenced to 60 Years in Federal Prison for Producing Child PornograpyRead the Press Release
GRAND RAPIDS, MICHIGAN – Floyd Andrew Brown, Jr., 36, of Lyons, Michigan was sentenced to 720 months (60 years) in federal prison for producing child pornography, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge Robert Holmes Bell imposed a lifetime term of supervised release that will commence once Brown is released from imprisonment. Brown will also be required to register as a sexual offender.
The case came to the attention of law enforcement in late 2012, when Brown printed a pornographic image of a minor at a department store. An attentive store employee called the police. Police interviewed Brown and executed search warrants at his residence, where they recovered a substantial amount of child pornography and other evidence. The investigation revealed that Brown had been sexually abusing young girls and producing child pornography at his home and elsewhere. Brown was taken into custody in December 2012, and he pleaded guilty to two counts of producing child pornography in July 2013. He admitted at the plea hearing that he had sexually abused young girls and had produced child pornography videos and images of that conduct. He further admitted that he had sexually exploited five female victims aged 12 and under. He also admitted to possessing additional child pornography.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.
The Department of Homeland Security, Homeland Security Investigations (HSI) and the Michigan State Police (MSP) investigated the case. Assistant U.S. Attorney Sean M. Lewis prosecuted the case..
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Kentwood Pharmacy Owner and Eight Additional Employees Indicted for Conspiracy to Misbrand DrugsRead the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr. announced today that a federal grand jury charged Kim Mulder, the owner and CEO of Kentwood Pharmacy, with a Superseding Indictment charging conspiracy to misbrand drugs and conspiracy to create false prescription records. Mulder also faces a charge of structuring cash transactions in order to avoid bank reporting regulations which was part of an earlier indictment.
The grand jury also charged an additional eight employees, who held various positions in the company, with conspiracy to misbrand drugs. These employees include vice-president of sales Richard Clarke; chief Pharmacist Lawrence Harden; pharmacy floor manager Jessica Veldkamp; billing manager Elizabeth Morgan; staff pharmacist Erin Rivard; sales representative Michelle Shedd; drug packer Heather Harden; and distribution manager Gary Franks. The Superseding Indictment alleges that Mulder and the named employees arranged for unused drugs to be picked up from adult foster care and nursing homes and that these returned drugs were later re-dispensed by Kentwood Pharmacy. The charge asserts that the defendants misbranded the drugs when they returned the drugs to Kentwood Pharmacy by placing the returned drugs into stock bottles that bore incorrect lot numbers and expiration dates and into amber pill vials that bore no lot numbers or expiration dates. The conspiracy count charges that a number of the defendants took actions to conceal this conduct from employees and the homes by undertaking the sorting of returned drug at unlicensed off-site locations, including a strip mall office and the basement of the chief pharmacist’s home.
A second conspiracy charge alleges that Mulder, chief pharmacist Lawrence Harden, and billing manager Elizabeth Morgan also created false prescription records. All of the charges in the Superseding Indictment are felonies punishable by up to five years imprisonment and fines of $250,000.00.
Earlier this month, U.S. District Judge Janet T. Neff sentenced three semi-retired pharmacists to fines ranging from $15,000 to $30,000 on charges of felony misbranding of drugs related to their part-time employment at Kentwood Pharmacy.
Individual patients may have received drugs from Kentwood Pharmacy as early as 2004, and continuing through November 2010, which were misbranded or adulterated. Examples of such misbranded or adulterated drugs include mislabeled drugs, discolored drugs, or expired drugs. Persons who believe they may have received or paid for drugs supplied by Kentwood Pharmacy between 2004 and November 2010, which were misbranded or adulterated are asked to contact the U.S. Attorney’s Office for the Western District of Michigan.
Potential Victims may contact the Western District of Michigan U.S. Attorney’s Office by visiting the office’s website and accessing a form related to this case at:
http://www.justice.gov/usao/miw/programs/victimwitness.html Alternatively, potential victims may call the office’s Victim Witness Unit at (616) 808-2034 and provide the information over the phone.The investigation of this matter involves the FDA, FBI, DEA, HSS-OIG, IRS, and the Michigan State Police. Assistant U.S. Attorney Ray Beckering is the prosecutor.
Charges in an indictment are only allegations and are not evidence of guilt. A defendant is presumed innocent unless and until proven guilty, and the government has the burden of proving guilt beyond a reasonable doubt..
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Staff Pharmacists at Kentwood Pharmacy Sentenced to Stiff Fines on Charges of Misbranding Drugs and Face Exclusion and Debarment from Federal ProgramsRead the Press Release
GRAND RAPIDS, MICHIGAN – James D. Orr, 76, and Eugene A. Biegert, 69, of Grand Rapids, Michigan, and Thomas N. VerHage, 68, of Kentwood, Michigan were sentenced by U.S. District Judge Janet T. Neff to substantial fines following their guilty pleas to charges of the felony misbranding of drugs while working as staff pharmacists at Kentwood Pharmacy. The judge imposed monetary penalties exceeding the fine range recommended by federal sentencing guidelines: a fine of $30,000.00 for VerHage and Orr and $15,000.00 for Biegert.
In addition, as a consequence of the convictions, U.S. Department of Health and Human Services will exclude the defendants from participation in any Federal Health Care Program (Medicaid and Medicare) and the U.S. Food and Drug Administration will debar them from working for anyone with an approved or pending drug product application.
During their earlier plea hearings, the pharmacists acknowledged that they were aware that Kentwood Pharmacy restocked drugs that were returned from nursing homes and adult foster care homes. The defendants admitted that receiving such returned drugs and placing the returned drugs back on the stock shelves resulted in the drugs being placed into stock bottles and other containers which did not maintain the accurate lot numbers and expiration dates for the drugs. The defendants admitted that, in their position as staff pharmacists, they approved prescriptions that were prepared and dispensed to foster care and nursing homes. They acknowledged that some of the prescriptions contained drugs that they knew were returned to stock in violation of state and federal laws, including drugs that had been misbranded.
At the sentencing hearings, Judge Neff found that the staff pharmacists created a substantial risk of harm by approving the illegal restocking and re-distribution of prescription drugs. The judge described the scheme to collect unused drugs from nursing homes and adult foster homes and then re-dispense these drugs as “clever, illegal, and potentially lethal.” She explained that the substantial fines were necessary to deter others and to punish these defendants for their failure to exercise their professional responsibilities as pharmacists and stop or report the illegal practices at Kentwood Pharmacy. Judge Neff further explained that none of the defendants had any prior criminal history, did not financially benefit from the criminal activities and that federal sentencing guidelines did not call for substantial prison time as a deterrent.
U.S. Attorney Patrick Miles said, “The public must be able to rely on pharmacists who have both professional and statutory duties to ensure that pharmacies operate in compliance with federal and state laws regulating the handling, packaging, and distribution of drugs. As this case demonstrates, even semi-retired pharmacists who work part-time are expected to fulfill their statutory and professional obligations. If such professionals fail to comply with state and federal laws, they should expect to be prosecuted and face loss of their license, substantial financial penalties, and the possibility of imprisonment for violations of the public’s trust.”
“Patients must have confidence that the prescription drugs they receive from pharmacies are safe and effective,” said Special Agent in Charge John J. Redmond of the U.S. Food and Drug Administration, Office of Criminal Investigations, Chicago Field Office. “The FDA will aggressively pursue those who cause drugs to become misbranded while held for sale, and the agency will strive to ensure that they are prosecuted to the full extent of the law.”
The investigation of this matter involves the FDA, FBI, DEA, HSS and IRS. Assistant U.S. Attorney Ray Beckering is the prosecutor.
The investigation of this case was initiated by confidential tips. If Michigan residents or medical professionals suspect possible violations of law or other dangerous practices involving pharmacies or prescription drugs, they can contact the FDA at http://www.fda.gov/ICECI/criminalInvestigations/default.htm or the DEA at http://www.justice.gov/dea/index.html.
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Muskegon Landlord Convicted of Arson, Insurance Fraud, and Tax Fraud Sent to Federal Prison for 55 YearsRead the Press Release
GRAND RAPIDS, MICHIGAN – Gerald Eugene Singer, 74, of Muskegon, Michigan, was sentenced to 55 years in prison, U.S. Attorney Patrick Miles announced today. In addition to the prison terms, United States District Judge Gordon J. Quist also ordered Singer to pay $653,140 in restitution to the victims of his crimes.
Singer was convicted by a jury in March 2013 of two counts of arson, three counts of using fire to commit mail fraud, one count of mail fraud, and five counts of tax fraud after a 16-day trial at which nearly 100 witnesses testified. The jury found that Singer committed arson and used fire to commit mail fraud at the following properties:
1292 E. Broadway, Norton Shores, MI, a commercial building formerly known as “The Fair” fabric store, which was insured by Hartford Insurance and Westport Insurance (destroyed by fire on June 20, 1999);
250 Myrtle St., Muskegon, MI, an investment/rental property which was insured by Foremost Insurance (destroyed by fire on November 9, 2006); and
2608-2614 7th Street, Muskegon Heights, MI, a four-unit apartment complex insured by Farm Bureau General Insurance Company (destroyed by fire on August 28, 2007).
The mail fraud charge included those properties as well as fires at six additional properties and
two attempted fires at properties in Muskegon Heights, MI.The jury also convicted Singer of filing a false tax-related document each year between 2005 and 2008 for failing to disclose to the IRS approximately $500,000 in insurance proceeds from the fire at “The Fair” fabric store in Norton Shores. Singer also was convicted of obstructing the administration of tax laws by causing false individual income tax returns for tax years 2005 through 2008 to be filed; making false and misleading statements to IRS officials about his individual income tax returns; misleading his tax preparer by withholding information; concealing income from the IRS by means of “structuring” the payout of insurance funds; and causing the filing of false home buyer tax credit claims against the IRS.
U.S. Attorney Miles said, “Arson endangers the lives of residents, neighbors and first responders, it raises the cost of insurance for everyone, and it harms neighborhoods. Today, Mr. Singer received the bitter fruits of his continual disregard for others. He learned that arson and fraud do not pay. He will be spending a long time where he belongs, which is in prison.”
Daryl McCrary, Acting Special Agent in Charge of the Detroit office of the Bureau of Alcohol, Tobacco, Firearms & Explosives (“ATF”) and Carolyn Weber, Acting Special Agent in Charge of the Detroit office of the Internal Revenue Service-Criminal Investigation (“IRS-CI”), joined in the announcement of the sentences.
ATF Acting Special Agent in Charge Daryl McCrary said, “This complex multi-layered, multi-agency investigation further displays that arson (arson for profit) crimes are not victimless fires, they result in the loss of income and the loss of property. Mr. Singer’s wanton criminal acts have altered and endangered the lives of many citizens in the community, including the fire fighters who responded to these fires,” said McCrary. “This sentence will not heal the individuals affected, but we hope it will deter others from committing heinous acts of arson in the future.”
IRS Criminal Investigation Acting Special Agent in Charge, Carolyn Weber, stated, “Gerald Singer lined his pockets with the proceeds of false insurance claims. IRS will vigorously pursue those who seek to profit from illegal activities.”
Under federal sentencing laws, the Court was required to sentence Singer to at least 5 years and up to 20 years in prison for the arson convictions. The law also mandated that Singer receive a consecutive minimum sentence of 10 years for the first conviction of using fire to commit mail fraud and two additional mandatory consecutive minimum sentences of 20 years for the second and third convictions for using fire to commit mail fraud.
This case was investigated by the Grand Rapids offices of the ATF and IRS-CI, and the Muskegon Heights Fire Department. Assistant U.S. Attorneys Michael MacDonald and Christopher O’Connor prosecuted the case..
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LG Chem Michigan, Inc. to Pay over $1.2 Million to the United States to Settle False Claims Act AllegationsRead the Press Release
Government alleged that the Holland, Michigan company improperly obtained Recovery Act funds to pay employees engaged in recreational and volunteer activities
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr., announced today that LG Chem Michigan, Inc. (“LGCMI”) will pay the United States $1,231,319 to resolve allegations, under the federal False Claims Act, that the company improperly sought and obtained federal funds to pay employees who were engaged in recreational and volunteer activities. This amount is in addition to $842,189 that LGCMI refunded to the U.S. Department of Energy (“DOE”) in January 2013 based on the same allegations. LGCMI did not admit liability as part of this settlement, and the Government did not make any concessions regarding the legitimacy of its claims.
In 2010, DOE awarded LGCMI over $150 million in funds under the American Recovery and Reinvestment Act of 2009 to construct and operate a lithium-ion battery manufacturing plant in Holland, Michigan. The United States alleged that during the first three quarters of 2012, before LGCMI transitioned battery production from foreign sources to the Michigan plant, LGCMI submitted claims to obtain the federal share of wages and benefits paid to domestic workers who were engaged in non-work activities such as watching movies, playing games, and performing volunteer work. The United States further alleged that in response to governmental inquiries about those activities—and particularly in corporate executives’ written communications to DOE and statements made during a DOE audit—LGCMI failed to fully disclose the number of employees involved in those activities, the nature and scope of those
activities, and the resulting losses to the government.U.S. Attorney Miles noted that under the federal False Claims Act, the United States can seek up to three times the damages that it sustains, plus statutory penalties, from those who submit false claims for federal funds. U.S. Attorney Miles emphasized that the manner in which LGCMI handled the unallowable costs shortly after those costs were identified factored into the Government’s settlement position in this case. “Those who receive federal grant funds must deal openly and honestly with the federal government,” U.S. Attorney Miles said. “This settlement should send a clear message to our corporate citizens: ‘How you respond to a problem can be as significant as the problem itself.’”
Gregory H. Friedman, the DOE Inspector General, said, “Evaluating the management of Department funds received as part of the 2009 Recovery Act has been a priority of my office. We are pleased that this matter, which involved the expenditure of significant unallowable costs by LGCMI, has been settled. I want to express my thanks to the U.S. Attorney’s Office for its efforts and to the Inspector General Special Agents and auditors who pursued this matter so effectively.”
This case was investigated by the DOE, Office of Inspector General, and the U.S. Attorney’s Office for the Western District of Michigan. Assistant U.S. Attorney Adam B. Townshend represented the United States..
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Western Michigan U.S. Attorney’s Office Seeks to Identify Victims in Cases Against Kentwood Pharmacy PharmacistsRead the Press Release
GRAND RAPIDS, MICHIGAN – The U.S. Attorney’s Office for the Western District of Michigan is handling criminal cases involving various individuals in connection with their employment at Kentwood Pharmacy. From approximately 2004 through November 2010, Kentwood Pharmacy operated retail pharmacies in Grand Rapids (formerly Eastgate Pharmacy), Shepard, Alma, and St. Louis, Michigan. Additionally they serviced nursing homes, adult foster care homes, and other long term care facilities throughout Michigan and Northern Indiana.
To date, three pharmacists have pled guilty to misbranding prescription drugs during their employment at Kentwood Pharmacy and are scheduled to be sentenced, in Federal Court, on November 13 and 14, 2013, before District Court Judge Janet T. Neff. Individual patients may have received drugs from Kentwood Pharmacy as early as 2004, and continuing through 2010, which were misbranded or adulterated. Examples of such misbranded or adulterated drugs include mislabeled drugs, discolored drugs, or expired drugs. Persons who believe they may have been victims of this crime because they received or paid for drugs supplied by Kentwood Pharmacy between 2004 and November 2010, which were misbranded or adulterated are asked to contact the U.S. Attorney’s Office for the Western District of Michigan.
Potential victims may contact the Western District of Michigan U.S. Attorney’s Office by visiting the office’s website and accessing a form related to this case at: http://www.justice.gov/usao-wdmi/victim-and-witness-assistance-program.html Alternatively, potential victims may call the office’s Victim Witness Unit at (616) 808-2034 and provide the information over the phone.END
Two Grand Haven Men Plead Guilty to Theft of Firearms from Gun Stores in Ottawa and Muskegon CountiesRead the Press Release
GRAND RAPIDS, MICHIGAN – Muskegon County Prosecutor D.J. Hilson and Ottawa County Prosecutor Ronald J. Frantz joined U.S. Attorney Patrick Miles in announcing today that Joseph Jerry Sweet, age 33, and Ronald Patrick Cook, age 27, both from the Grand Haven area, pled guilty to two counts of stealing firearms from Federal Firearms Licensees. The defendants face up to ten years in prison on each of the two counts of conviction.
Sometime during the night on June 27, 2013, the two defendants broke into the Renegade River store in Spring Lake, Michigan, stealing eight firearms. On July 13, 2013, the two broke into the Grasmeyer Brothers Gun & Supply Shop in Dalton Township, Michigan, at approximately 12:30 a.m., stealing 24 firearms, including twenty handguns and four rifles. Cook admitted as part of his plea and in an interview with law enforcement that the two intended to traffick the firearms and that they exchanged some of the weapons for heroin and cash on the street. Federal law prohibits the theft of firearms from Federal Firearms Licensees. Both stores are federally-licensed firearms dealers.
Cook was previously convicted five times for felonies, including a breaking and entering conviction in 2007 and an assault with a dangerous weapon conviction in 2011. Sweet is a three-time convicted felon, having been convicted of breaking and entering in 2004, larceny in 2005 and felony drunk driving in 2008. Federal charges of possessing firearms as convicted felons will be dismissed at sentencing, given the guilty pleas to the theft charges.
This case resulted from a coordinated investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Muskegon County Sheriff’s Department, the Grand Haven Public Safety Department, the Spring Lake/Ferrysburg Police Department, and the Michigan State Police-West Michigan Enforcement Team (WEMET).
U.S. Attorney Patrick Miles said, “Stealing firearms is illegal. Intending to sell stolen firearms is both illegal and dangerous. These defendants put people’s lives at risk by increasing the number illegal guns in the hands of criminals.”
Sonja A. Everitt, Resident Agent in Charge, Grand Rapids ATF, stated, “This investigation is an example of ATF’s commitment and determination in making our communities safe. ATF’s Frontline strategy is our business model that addresses gun trafficking crime. These accomplishments could not have been achieved without the collaboration and hard work of ATF, Muskegon County Sheriff’s Office, Ottawa County Sheriff’s Office, Spring Lake Police Department, Grand Haven Department of Public Safety, and the United States Attorney’s Office.”
Muskegon County Prosecutor D.J. Hilson commented: “I appreciate working with the U.S. Attorney’s Office to help rid Muskegon County of the individuals who try to put stolen guns on our streets which only promotes violence. I look forward to continuing our strong partnership in making Muskegon County a safe place to work and live.”
Ottawa County Prosecutor Ron Frantz echoed the sentiment: “Once again our long-standing partnership between local and federal law enforcement has been successful in reaching across jurisdictional lines and bringing perpetrators to justice.”
The defendants will be sentenced by the Honorable Robert J. Jonker. A sentencing date has not yet been scheduled. It is expected to take place in approximately ninety days.
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DOJ and the Eastern and Western Districts of Michigan U.S. Attorneys Respond to New Michigan Limited English Proficiency Court RuleRead the Press Release
The letter addressed to the Michigan Supreme Court is attached below.
2013_0917_AAG_LetterMi_CourtRule111
Lansing Home Health Business Owner Sentenced to Prison for Obstructing the Irs by Evading Payment and Falsifying Quarterly Tax Returns Totalling over $250,000.00Read the Press Release
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that George Adatsi, age 49, of Lansing, Michigan, was sentenced to eighteen months imprisonment after pleading guilty to a felony tax offense of obstructing the IRS. U.S. Attorney Miles was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service (IRS) Criminal Investigation Division.
At the sentencing hearing, U.S. States District Judge Janet T. Neff also imposed restitution of $204,406.00; a fine of $4,000.00; and one year of supervised release following imprisonment. Adatsi was the owner of two companies, Health Staffers, Inc. (HSI) and Health Staffers of Michigan, Inc. (HSMI) that employed nurses and home health aides who provided health care services in private homes and nursing homes. During the 2001 through 2003 tax years, Adatsi failed to pay over to the IRS the Social Security and Medicare (commonly referred to as “FICA”) taxes withheld from the employees of HSI. Adatsi admitted that he did not forward to the IRS $121,214 of FICA taxes withheld from his employees from 2001 through 2003 and that he later intentionally hid assets from the IRS to avoid payment of this amount.
Adatsi further admitted that from 2004 through 2008 he filed false Form 941 Quarterly Federal Tax Returns that under reported HSMI’s gross wages paid to its employees and, consequently, under reported both the income taxes and FICA taxes withheld from the HSMI employees. Adatsi acknowledged that the total of the underreported employment taxes was an additional $129,929.
“Adatsi grossly under reported the wages of his employees. He hid assets from the IRS and claimed he did not have the money to pay the taxes which he had already collected from his employees,” said Special Agent in Charge Erick Martinez. “The law is clear on the issue of employers’ responsibility to accurately report and forward withholding taxes and to deal honestly with the IRS.”
The investigation of this case was conducted by the IRS, and prosecuted by Assistant U.S. Attorney Ray Beckering.
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Defendant in Children Charity Fraud Case Sentenced to PrisonRead the Press Release
Nehemiah Muzamhindo Sentenced for Bilking W.K. Kellogg Foundation of $629,000
GRAND RAPIDS, MICHIGAN – Nehemiah Muzamhindo, a resident of Grand Rapids, Michigan and citizen of Zimbabwe, was sentenced to a total of six years (72 months) in prison on federal charges of money laundering and filing a false tax return. In addition to ordering the prison time, the Hon. Janet Neff, U.S. District Court Judge, also ordered Muzamhindo to pay over $629,000 in restitution and over $79,000 in back taxes.
While the Diplomatic Security Service (DSS) was investigating Muzamhindo for his role in a scheme to obtain fraudulent U.S. passports, agents discovered evidence that Muzamhindo had received large wire transfers from bank accounts held by the W.K. Kellogg Foundation (“WKKF”) in the Republic of South Africa. WKKF has its headquarters in Battle Creek, Michigan and is one of the world’s largest children’s charities. Further investigation revealed that Muzamhindo was part of a scheme to submit bogus invoices for payment to WKKF. WKKF paid members of the scheme a total of approximately $800,000 between 2006 and 2008 before learning that it was being swindled. As part of his sentencing, Muzamhindo was ordered to pay restitution to the WKKF for the amount directly attributable to his role in the scheme. Because Muzamhindo did not report to the IRS any of the money he received from WKKF during those
years, the IRS also investigated Muzamhindo, leading to his conviction for filing a false tax return and the order to pay the amount he owed in unpaid taxes as part of his sentence.U.S. Attorney Patrick Miles commented that “This sentence of prison time and restitution holds Muzamhindo accountable for the full measure of his deceit to both the charity that he swindled and the government. That should be a lesson for others; crime does not pay in this district.”
IRS Criminal Investigation Acting Special Agent in Charge Carolyn Weber added: “Muzamhindo and his accomplices stole money that was meant for the world’s underprivileged children. IRS, DSS and our Federal law enforcement partners will continue to fervently seek justice for the victims of this kind of inexcusable fraud.” Scott Collins, Assistant Special Agent in Charge of the Chicago Field Office of the Diplomatic Security Service, noted “Those who fraudulently acquire U.S. travel documents often do so in order to commit other crimes. Aware of this trend, we were able to uncover the connections to South Africa and the underlying scheme to defraud a charity. DSS takes very seriously our charge to protect the integrity of the U.S. passport and visa programs.”
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Mattawan Man Indicted for Child Exploitation and Other Related ChargesRead the Press Release
GRAND RAPIDS, MICHIGAN – A federal grand jury indicted James Alfred Beckman, Jr., of Mattawan, Michigan for a number of charges including Sexual Exploitation of a Child, Attempted Coercion and Enticement of a Child, and Receipt of Child Pornography. The grand jury alleges in the indictment that Beckman committed these offenses between November of 2011 and September of 2012. If convicted of these charges, Beckman faces up to life imprisonment.
The charges are the result of a joint investigation by the Federal Bureau of Investigation (FBI) and the Michigan State Police (MSP), and this case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.
The charges in the indictment are only allegations and are not evidence of guilt. The defendant is presumed innocent unless and until proven guilty, and the government has the burden of proving his guilt beyond a reasonable doubt.
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Federal Jury Convicts Block Burners of Drug Trafficking, Robbery and MurderRead the Press Release
GRAND RAPIDS, MICHIGAN – Four Lansing men were convicted of drug trafficking, armed robbery and first degree murder in U.S. District court in Grand Rapids late Wednesday afternoon, announced U.S. Attorney Patrick A. Miles, Jr. The men—Charles Kunta Lewis, age 36, Wallee Abdullazeem Al-Din, age 24, his brother, Mustafa Al-Din, age 25, and Ralphael Crenshaw, age 24, were tried by a jury before U.S. District Judge Robert J. Jonker. After a two-week trial, the jury convicted the defendants of conspiring to commit drug trafficking crimes and robbery, and using a firearm during and in relation to a drug trafficking crime resulting in murder. The four defendants were found guilty of abducting and murdering Lansing resident Shayla Johnson, age 19, in an effort to obtain drugs. This charge carries a maximum term of life in prison.
Evidence at trial established that the defendants were members and associates of a violent Lansing street gang known as the Block Burners. The prosecution’s evidence demonstrated that during one six-week span in the summer of 2010, the defendants were involved in a violent pattern of robbing and at times beating victims for drugs, money and other valuable items. Their violent conduct culminated in the kidnaping and first degree murder of Shayla Johnson. The defendants wrongly believed Shayla Johnson had access to a large amount of marijuana plants. The defendants planned to kidnap her in order to compel her to disclose the location of the marijuana plants. Acting on their plan the defendants entered her home, forced her from her bedroom, and brutally shoved her into the trunk of a vehicle. When Ms. Johnson fought back, she was fatally shot multiple times with an assault rifle.
In the fall of 2010, the Ingham County Prosecutors Office sought the assistance of the U.S. Attorney’s Office in the prosecution of the matter because of serious concerns over allegations of obstruction and intimidation by gang members. The decision was made to transfer the case to federal court for prosecution. The case was investigated by the Lansing Police Department, the Meridian Township Police Department and the Bureau of Alcohol, Tobacco and Firearms.
This case was prosecuted by Assistant U.S. Attorneys Timothy P. VerHey and Brian K. Delaney. No sentencing date has yet been announced.
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Health Care Business Owner Sentenced to Four Years in Prison, Pays A Million Dollar Civil Settlement, and Agrees to 20-year Exclusion from Medicare and Medicaid in Connection with Illegal Kickback SchemeRead the Press Release
Babubhai Rathod is the Ninth Person Convicted of Felony Charges in a Joint Federal-State Investigation Resulting from a Whistleblower Lawsuit
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that Babubhai Rathod, age 44, of Okemos, Michigan, was sentenced to four years in prison and two years of supervised release for his lead role in a conspiracy to pay illegal kickbacks to health care practitioners and others to induce the referral of patients to medical clinics, physical therapy clinics, and a home health care agency. U.S. District Judge Janet T. Neff also ordered Rathod to pay $950,000 in restitution, $900,000 of which Rathod paid prior to sentencing under the terms of a related $1,000,000 civil False Claims Act settlement. As part of that civil settlement, Rathod also agreed to a 20-year exclusion from federal health care programs, including Medicare and Medicaid. In sentencing Mr. Rathod, Judge Neff described the kickback charges as “very, very serious” and having “consequences to . . . very important government programs in which millions of Americans participate.”
Rathod’s conviction and the related civil settlement arose from a superseding indictment and civil complaint which alleged that between at least January 2007 and January 2012, Rathod directed a scheme to pay physicians, mid-level practitioners, and others for referring patients to medical clinics (Lakeshore Spine & Pain, P.C., based in Ludington, MI), physical therapy clinics (U.S. Rehab Services, P.C., among others, based in Mt. Pleasant, MI), and a home health care agency (Lakeshore Home Health Care, Inc., based in Lansing, MI). The illegal payments were made in cash and checks disguised as bonuses, mileage reimbursements, and payments under sham contracts for medical director and consulting services that were never performed. During the sentencing hearing, Judge Neff specifically noted that the physicians who received such kickbacks stole from government programs that provide “crucial medical services.” Judge Neff further emphasized, with respect to such medical professionals, that “[a] thief is a thief.”
The superseding indictment and civil complaint also alleged that between at least January 2007 and January 2012, Rathod directed a scheme where Lakeshore Spine & Pain, P.C. routinely submitted claims for medical services in order to fraudulently obtain higher insurance reimbursements than those to which the company was entitled, a practice known as upcoding. Notably, Rathod was able to own and operate this network of affiliated health care companies, and direct these kickback and upcoding schemes, despite the fact that in 2003, Rathod pleaded one of his physical therapy companies guilty to a felony charge of falsifying medical records and subsequently lost his physical therapy license as the result of an assault conviction involving a patient.
Rathod’s sentencing follows the felony convictions of five other persons who paid or received illegal kickbacks in exchange for referring patients to Rathod’s health care companies for physical therapy, electrodiagnostic testing, and home health care services. Judge Neff imposed the following sentences for those individuals:
- Lino S. Dial, Jr., D.O. (Physician, Edmore, MI). Dial was sentenced to four months’ imprisonment and $70,000 in restitution. Dial has also been excluded from federal health care programs for five years.
- Clinton J. Cornell, P.A. (Physician Assistant, Mt. Pleasant, MI). Cornell was sentenced to fourteen months’ imprisonment and $38,430 in restitution. Cornell is also subject to a minimum five-year exclusion from federal health care programs.
- John E. Roberts, P.A. (Physician Assistant, Mt. Pleasant, MI). Roberts was sentenced to four months’ imprisonment and $70,000 in restitution. Roberts has also been excluded from federal health care programs for five years.
- Natalie J. Schutte, P.A. (Physician Assistant, Edmore, MI). Schutte was sentenced to two years’ probation and $120,000 in restitution. Schutte has also been excluded from federal health care programs for five years.
- Raju G. Nakum (Practice Administrator, Mt. Pleasant, MI). Nakum was sentenced to three months’ imprisonment and $345,000 in restitution. Nakum is also subject to a minimum five-year exclusion from federal health care programs.
Two other individuals employed by Lakeshore Spine & Pain, P.C. were convicted of felony health care fraud for their roles in the illegal upcoding scheme. Judge Neff imposed the following sentences for those individuals:
- Rajesh Makwana (Practice Administrator, Ludington, MI). Makwana was sentenced to twelve months and one day imprisonment and $71,000 in restitution. Makwana is also subject to a minimum five-year exclusion from federal health care programs.
- Sandeepkumar Patel (Biller, Ludington, MI). Patel was sentenced to two years’ probation. Patel has been excluded from federal health care programs for five years and will be deported from the United States.
In addition to these individuals and Rathod, a ninth individual, Kevin Witt, D.O., of Jackson, Michigan was charged and convicted by the Michigan Attorney General’s Office on a related state felony charge for accepting kickback payments from Rathod. Witt has been excluded from federal health care programs for five years.
This case resulted from a civil lawsuit filed by a whistleblower who worked in one of Rathod’s offices. The lawsuit, known as a qui tam action, was filed under the False Claims Act and Michigan Medicaid False Claims Act, which allow private whistleblowers to bring lawsuits on behalf of the United States and the State of Michigan and receive a share of any recoveries. In this case, the United States and State of Michigan intervened in the whistleblower’s lawsuit, recovered $1,140,000 to date, and are pursuing additional claims against over a dozen other physicians and mid-level practitioners. The whistleblower has received $240,100 of these settlement proceeds, as well as additional amounts for attorney’s fees and costs.
“Whistleblowers play a key role in protecting federal health care programs from fraud and abuse, including kickback schemes that are often difficult to detect and result in the referral of unnecessary and upcoded services,” said U.S. Attorney Miles. “Paying kickbacks for patient referrals distorts the motives of health care professionals. The U.S. Attorney’s Office will continue to aggressively investigate and prosecute such kickback schemes and seek all available civil and criminal remedies including treble civil damages, monetary penalties, and felony prosecutions.”
“It is essential to maintain integrity in our healthcare system. Patients deserve to know that when a doctor refers them for additional treatment, the decision to do so is based upon quality health advice—not what is best for the doctor’s bottom line,” said Attorney General Bill Schuette. “Kickbacks with the Medicaid program do not just hurt patients, they affect the taxpayers whose hard-earned dollars subsidize healthcare for those in need.”
FBI Special Agent in Charge Robert D. Foley, III stated, “Those who provide health care must be held to the highest standards of ethics and integrity. The FBI remains committed to pursuing and prosecuting such criminals who abuse the system by receiving illegal kickbacks.”
“Paying kickbacks for the referral of Medicare or Medicaid patients is a serious crime,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “Kickbacks inappropriately influence health care practitioners’ medical decision making process, lead to overutilization and/or upcoding of services, and further increase program costs. The OIG will continue to aggressively pursue all available remedies whether criminal, civil or administrative to ensure the integrity of the Medicare and Medicaid programs and protect vital taxpayer dollars.”
These convictions and settlements were the result of a coordinated effort by the U.S. Attorney’s Office for the Western District of Michigan, the Michigan Attorney General’s Office, the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and Blue Cross Blue Shield of Michigan.
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Baraga Man Sentenced in KBIC Beating and Hannahville Sexual AssaultRead the Press Release
MARQUETTE, MICHIGAN – Joel Thomas Smith, 24, of Baraga, Michigan, was sentenced to 71 months in federal prison for assault resulting in serious bodily injury and sexual abuse of a minor, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge R. Allan Edgar ordered Smith to serve eight years of supervised release following his release from prison, and to pay a $200 special assessment. Smith, who was on federal supervised release from a 2009 conviction for assault with a dangerous weapon, was sentenced to an additional18 months in federal prison for the violation of his supervised release.
On May 13, 2013, Smith pleaded guilty to a federal indictment charging him with assault resulting in serious bodily injury and a felony information charging him with sexual abuse of a minor. The assault charge arose from an incident at a residence in Baraga, Michigan, on the Keweenaw Bay Indian Community reservation on February 11, 2013. During this incident, Smith assaulted his live-together girlfriend, fracturing one of her ribs. The sexual assault charge stemmed from an incident in summer 2007 at a residence located on the Hannahville Indian Community reservation. During this incident, Smith, who was 19 at the time, engaged in sexual intercourse with a 13 year-old girl. This incident first came to light in May 2011, when the victim first disclosed what had happened to her.
The Keweenaw Bay Indian Community Tribal Police, the Hannahville Indian Community Tribal Police and the FBI investigated the cases. Assistant U.S. Attorney Paul D. Lochner prosecuted the cases.
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Federal Prisoner Receives an Additional 184 Months’ Imprisonment for Crimes Committed While IncarceratedRead the Press Release
Mark Nowell Basnight Sentenced to Additional Prison Time for Attempting to Distribute Heroin in Prison and Committing Identity Theft as Part of a Scheme to Defraud Financial Institutions
GRAND RAPIDS, MICHIGAN – United States Attorney for the Western District of Michigan Patrick Miles announced today that Mark Nowell Basnight, age 39, of East Lansing, Michigan, was sentenced yesterday to serve 184 months in prison for attempting to possess heroin with intent to distribute it in a federal prison, and for his role in a scheme to defraud financial institutions that included the production of false identification documents, one of which included the means of identification of a real individual residing in Lansing, Michigan. He was joined in the announcement by FBI Special Agent in Charge, Robert D. Foley. U.S. District Judge Robert Jonker’s sentence provided that all 184 months of imprisonment for these offenses will be served consecutively to the 7 years that remain to be served on Basnight’s 2009 federal court conviction for participating in a conspiracy to manufacture 100 or more marijuana plants. In handing down the sentence, the court emphasized that Basnight committed these offenses while in federal custody and that the evidence revealed that he began planning these or similar
offenses even while he awaited sentencing in 2009.In 2011, while incarcerated at a federal prison in West Virginia, Basnight attempted to obtain heroin from a source in Lansing, Michigan, so that he could distribute the heroin for profit in the federal prison. Basnight sent the source a book containing an order for heroin and containing vitamins secreted in the binding so that the source could see how he could send him drugs at the prison. At about the same time, Basnight and the source planned a scheme to defraud at least six financial institutions in several states. The scheme included the production of false identification documents, including driver’s licenses from Michigan and other states that contained the picture of another co-conspirator, who would use these false documents to obtain bank loans by fraud. One of the false identification documents contained the real personal identifiers of an individual residing in Lansing, Michigan, that were obtained by a co-conspirator through an individual that provided cleaning services to a local bank after it closed for the day.
“One of the primary goals of our federal prison system is to rehabilitate those convicted of federal crimes so that they can return as productive members of our communities,” said U.S. Attorney Miles. “This Office will vigorously prosecute those who choose to thwart this very important goal by continuing to commit crimes while serving time in our federal prisons.” FBI Special Agent in Charge, Robert D. Foley, agreed, stating, “This case is particularly troubling given that a federal prisoner committed identity theft, rather than taking steps toward being rehabilitated. Those individuals who choose to conduct further criminal activity while serving time in our federal prisons will face severe penalties for their illegal actions.”
The investigation of this case, which resulted in the conviction of five individuals in addition to Basnight, was conducted by the FBI. The case was prosecuted by Assistant U.S. Attorney Ron Stella.
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Dewitt Couple Charged in Cocaine SeizureRead the Press Release
GRAND RAPIDS, MICHIGAN – Patrick A. Miles, United States Attorney for the Western District of Michigan; Rodney M. Charles, Supervisory Agent in Charge of the Lansing, Michigan, FBI office; and Detective First Lieutenant Timothy Gill, Section Commander of the Tri-County Metro Narcotics Squad in Lansing, today announced the arrest and charge of Roberto Cantu, Jr., age 39, and Lindsay Ann Jones, age 30, as a result of the seizure of nearly a kilogram of cocaine and other evidence from their residence in DeWitt, Michigan, on August 1, 2013, pursuant to a search warrant. Cantu and Jones were arrested at that time and initially charged in a criminal complaint with possession of 500 grams or more of cocaine with intent to distribute. On August 6, 2013, Cantu and Jones were indicted on that offense by a federal grand jury in Grand Rapids. Both of them have been released on bond. The case has been assigned to the Hon. Paul L. Maloney, Chief District Judge, for further proceedings. If convicted on that charge, Cantu and Jones face a maximum penalty of not less than five years up to 40 years in prison, a $5,000,000 fine, and at least four years of supervised release.
The arrest and indictment were the result of an ongoing Drug Task Force investigation in the Lansing, Michigan, area by the FBI and Tri-County Metro Narcotics Squad. The investigation is continuing. The case is being prosecuted by Assistant U.S. Attorney John Bruha.
The charges in an indictment are merely accusations, and a defendant is presumed innocent until and unless proven guilty in a court of law.
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Owner of Hoffman Jewelers Pleads Guilty to Filing False Tax ReturnRead the Press Release
GRAND RAPIDS, MICHIGAN – Michael Hoffman, 59, of Ada, Michigan, pleaded guilty to willfully filing a false corporate tax return, U.S. Attorney Patrick A. Miles, Jr., announced today. Hoffman faces a sentence of three years imprisonment; a one year period of supervised release; a fine of $250,000; costs of prosecution; and a mandatory special assessment of $100. U.S. Attorney Miles was joined in the announcement by Special Agent in Charge Erick Martinez, IRS Criminal Investigation.
Hoffman, the owner of Hoffman Jewelers of East Grand Rapids, Michigan, acknowledged to U.S. Magistrate Judge Ellen S. Carmody that he willfully filed a false income tax return for his business in 2007 and further that the total tax loss for 2007 – 2009 for both the business and his personal returns was $261,320. The Government noted that Hoffman has paid that amount but faces additional civil penalties.
“This is a prime example of the serious consequences for cheating on your taxes,” said Special Agent in Charge Erick Martinez. “By pleading guilty, Hoffman is acknowledging he intentionally did not report all of the earnings from his jewelry business.”
Sentencing has been set for November 14, 2013, at 2:30 p.m. before U.S. District Judge Janet T. Neff.
Special Agents of the IRS investigated the case; Assistant U.S. Attorney Donald A. Davis prosecuted it.
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Lyons Man Pleads Guilty to Producing Child PornographyRead the Press Release
GRAND RAPIDS, MICHIGAN – Floyd Andrew Brown, Jr., 35, of Lyons, Michigan
pleaded guilty before the Hon. Ellen Carmody, U.S. Magistrate Judge, to two counts of
producing child pornography, U.S. Attorney Patrick A. Miles, Jr. announced today. Brown faces
a minimum of 15 years and a maximum of 60 years of imprisonment, and he will be required to
serve a term of supervised release after his prison term has been completed. Brown will also be
required to register as a sexual offender.Brown admitted at the plea hearing that he had sexually abused young girls and had
produced child pornography videos and images at his home in Ionia County. He also admitted
that on other occasions, he had used and attempted to use other minor females to create child
pornography. Finally, Brown admitted to possessing child pornography images at various times
in November and December 2012. Brown was ultimately taken into custody in December 2012,
and he remains in custody pending sentencing.This case is part of Project Safe Childhood, a nationwide initiative designed to protect
children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's
offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law
enforcement are working closely together to locate, apprehend, and prosecute individuals who
exploit children. The partners in Project Safe Childhood work to educate local communities
about the dangers of online child exploitation, and to teach children how to protect themselves.
For more information about Project Safe Childhood, please visit the following web site:
www.projectsafechildhood.gov. Individuals with information or concerns about possible child
exploitation should contact local law enforcement officials.The Department of Homeland Security, Homeland Security Investigations (HSI) and the
Michigan State Police (MSP) investigated the case. Assistant U.S. Attorney Sean M. Lewis
prosecuted the case.
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Village Market Food Centers’ Comptroller Sentenced to 87 Months in Prison for Stealing from CompanyRead the Press Release
GRAND RAPIDS, MICHIGAN – Christopher Earl Pratt, 42, of Portage, Michigan was sentenced today to 87 months (7 years and 3 months) in federal prison for defrauding his former employer, Village Market Food Centers, the U.S. Attorney’s Office announced today. In addition to the prison term, Chief U.S. District Judge Paul L. Maloney imposed a 3-year term of supervised release that will commence once Pratt is released from imprisonment. In addition to the prison and supervised release terms, Pratt was ordered to pay restitution in the amount of $6,548,706.30, plus ordered to forfeit an additional $6,548,706.30 to the government.
Pratt abused his position as comptroller to steal from Village Market, nearly putting the company out of business and resulting in the closure of at least three stores and the termination of 170 employees. Pratt concealed his crime from Village Market, which did not discover the theft until Pratt stole nearly seven million dollars over seven to eight years. Pratt used the stolen money primarily to purchase and refurbish “muscle-cars” including fourteen Ford Mustangs, seven Chevrolet Chevelles, four Dodge Challengers, five Chevrolet Camaros, four Jeep Wranglers, three Buick Skylarks, two Plymouth Barracudas, one Plymouth Fury, one Pontiac GTO, and one Ford Torino. The FBI recovered many of those vehicles and they were turned over to a receiver seeking to recover assets on behalf of Village Market.
The case was investigated by the FBI, St. Joseph, Michigan.
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Watervliet Man Gets Eight Years in Prison for Child PornRead the Press Release
GRAND RAPIDS, MICHIGAN – David Alan Inman, 51, of Watervliet, Michigan was sentenced on Wednesday, July 24, 2013, to 96 months (eight years) in federal prison for receipt of child pornography videos, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge Janet T. Neff imposed a 10-year term of supervised release that will commence once Inman is released from imprisonment. Inman will also be required to register as a sexual offender.
The case stemmed from an online investigation that took place in late 2009. During that investigation, members of law enforcement learned that an individual, later identified as Inman, had made numerous items of child pornography available for download on the Internet. Agents ultimately executed two search warrants at Inman’s home and recovered a number of computers that contained a substantial collection of child pornography. Inman confessed to downloading child pornography images and videos from the Internet, and he further admitted to sharing child pornography with others via the Internet.
This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov.
The Federal Bureau of Investigation (FBI) and the Berrien County Sheriff's Department investigated the case. Assistant U.S. Attorney Sean M. Lewis prosecuted the case.
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Hopkins Man Pleads Guilty to Distribution of Child PornograpyRead the Press Release
GRAND RAPIDS, MICHIGAN – Ronald Eugene Mabee, 66, of Hopkins, Michigan pleaded guilty today, Thursday, July 18, 2013, to distributing child pornography via the Internet, U.S. Attorney Patrick A. Miles, Jr. announced. Mabee faces a minimum of five years and a maximum of 20 years of imprisonment, and he will be required to serve a term of supervised release after his prison term has been completed. Mabee will also be required to register as a sexual offender.
During an on-line investigation last May, an undercover officer downloaded numerous child pornography files that Mabee had made available on the Internet. Agents then interviewed Mabee, who confessed to searching out and downloading child pornography via the Internet 50-60 times over the course of several months. Forensic analysis confirmed the presence of child pornography on Mabee’s computer. In pleading guilty, Mabee admitted that he knowingly made the child pornography he had downloaded from the Internet available for others to download.
U.S. Attorney Miles commented: “My office is committed to shutting down the child pornography market. If offenders like Mr. Mabee did not seek to possess and distribute this material, others would not produce it in the first place. These are not victimless crimes. The penalties are severe and deservedly so.”
“Child pornography is the permanent record of the sexual exploitation of children, and this victimization continues every time that image is transmitted, downloaded, shared, or viewed,” said William Hayes, Acting Special Agent in Charge of HSI Detroit. SAC Hayes added “HSI Special Agents will continue to aggressively target those who engage in this depraved activity.”This case is part of Operation iGuardian and Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney's Office, county prosecutor's offices, the Internet Crimes Against Children task force (ICAC), federal, state, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, please visit the following web site: www.projectsafechildhood.gov.
The Department of Homeland Security, Homeland Security Investigations (HSI) investigated the case. Assistant U.S. Attorney Sean M. Lewis prosecuted the case.
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